Reconcile payroll and STP data for your end-of-year finalisation
As a part of your STP finalisation process, you should reconcile your payroll and STP data. This step is important as it helps you keep accurate accounting records and ensures that the data you're sending to the ATO matches your payroll data.
In this article, we will cover:
- Running your reports
- Reconciling gross wages
- Reconciling PAYG withholding
- Reconciling superannuation
- What to do if you find a discrepancy
Refer to the Troubleshooting STP article for information on what discrepancies you can resolve yourself!
To see the whole EOFY process in action, from reconciliations to the annual wage increase, please register for our on-demand EOFY Masterclass here!
A reconciliation is the process of comparing what has been paid to your employees against what has been reported to the ATO through Single Touch Payroll (STP).
This is an important part of your end-of-financial-year (EOFY) processes, as it helps ensure your payroll records are accurate and that the figures reported to the ATO match your payroll data.
Items you will need to reconcile include:
- Gross earnings
- PAYG withholding
- Superannuation
When completing your reconciliation, any discrepancies should be identified and resolved before finalising your STP data. This helps ensure employee income statements are accurate and reduces the risk of reporting issues or amendments after finalisation.
Payroll reconciliation should be completed as part of your EOFY processing, with STP finalisation generally required by 14 July each year.
To reconcile your data, you will need to run the following reports:
- Advanced Payroll Activity Report
- STP Report
Both reports can be found by navigating to Reports > Financial.
Review each tab below for the specific requirements for each report.
The Advanced Payroll Activity Report (APAR) breaks down everything paid to your employees during the financial year (gross wages, PAYG withholding, super, allowances and deductions).
When running this report, make sure to use Cash Basis, as ATO reporting is based on when employees were paid in a financial year, not when the work was performed.
To produce the APAR report:
- Set your duration to 'Last Financial Year' (assuming you run this report after June 30).
- Group by Paying Entity and Employee ID (in that order).
- To the right, select the following checkboxes:
- Cash Basis – Organises data by payment date rather than when work was performed. This matches how the ATO attributes wages and PAYG withholding to a financial year.
- Split Deductions - Separates into gross/ net deductions columns.
- Display Non-Reported STP Amount Separately - Includes fields for Non-Reported STP Totals and Deductions.
- Separate Superannuation Contribution Types - Includes fields for Non-Reported STP Totals and Deductions.
- Select Submit.
- Export CSV.
The STP YTD Report shows exactly what has been reported to the ATO through Single Touch Payroll, giving you a clear view of the year-to-date figures submitted for each employee.
To produce the STP report:
- Select 'Last Financial Year' as your timeframe (assuming you are running this report after June 30).
- To generate your report, select Create Report.
- Next, you will want to export this report to compare the data. To do so, select Export > YTD Summary.
To reconcile your gross wages, you'll need to calculate various columns of data in both the Advanced Payroll Activity Report and the STP Report and confirm that your calculated totals match.
If your totals for each report do not match, please refer to the troubleshooting section below for the next steps.
Gross wages (payroll data) = Gross wages (STP data)
The table below identifies which columns must be included in your calculation to determine each report's total.
- The table on the left is for the Advanced Payroll Activity Report and should be calculated separately.
- The table on the right is for the STP Report and should be calculated separately.
Advanced Payroll Activity Report |
STP Report |
|||
| Gross Wages | Exempt foreign income | |||
| - | Non-STP Reported Total | + | Gross | |
= |
Gross wages (payroll data) | + | Overtime | |
| + | Bonuses and commissions | |||
| + | Directors fees | |||
| + | Other paid leave | |||
| + | Paid parental leave | |||
| + | Workers compensation | |||
| + | Ancillary and defence leave | |||
| + | Cash out of leave in service | |||
| + | Unused leave on termination | |||
| + | Cents per kilometre | |||
| + | Award transport allowance | |||
| + | Laundry allowance | |||
| + | Overtime meal allowance | |||
| + | Travel and overseas accommodation allowance | |||
| + | Tool allowance | |||
| + | Task allowance | |||
| + | Qualification allowance | |||
| + | Other: Non-deductible | |||
| + | Other: Uniform | |||
| + | Other: Private vehicle | |||
| + | Other: Home office | |||
| + | Other: Transport/Fares | |||
| + | Other: General | |||
| + | Lump sum A: Type R | |||
| + | Lump sum A: Type T | |||
| + | Lump sum B | |||
| + | Lump sum D | |||
| + | Lump sum E | |||
| + | Lump sum W | |||
| + | ETP type O: Tax free | |||
| + | ETP type O: Taxable | |||
| + | ETP type R: Tax free | |||
| + | ETP type R: Taxable | |||
| + | ETP type S: Tax free | |||
| + | ETP type S: Taxable | |||
| + | ETP type P: Tax free | |||
| + | ETP type P: Taxable | |||
| + | ETP type D: Tax free | |||
| + | ETP type D: Taxable | |||
| + | ETP type B: Tax free | |||
| + | ETP type B: Taxable | |||
| + | ETP type N: Tax free | |||
| + | ETP type N: Taxable | |||
| + | ETP type T: Tax free | |||
| + | ETP type T: Taxable | |||
| = | Gross wages (STP data) | |||
To reconcile your PAYG withholding, you'll need to calculate various columns of data in both the Advanced Payroll Activity Report and the STP Report and confirm that your calculated totals match.
If your totals for each report do not match, please refer to the troubleshooting section below for the next steps.
PAYG Withholding (payroll data) = PAYG Withholding (STP data)
The table below identifies which columns need to be included in your calculation to work out the total for each report.
- The table on the left is for the Advanced Payroll Activity Report and should be calculated separately.
- The table on the right is for the STP Report and should be calculated separately.
Advanced Payroll Activity Report |
STP Report |
|||
| PAYG Withholding | PAYGW | |||
| = | PAYG Withholding (payroll data) | + | ETP type O: Tax | |
| + | ETP type R: Tax | |||
| + | ETP type S: Tax | |||
| + | ETP type P: Tax | |||
| + | ETP type D: Tax | |||
| + | ETP type B: Tax | |||
| + | ETP type N: Tax | |||
| + | ETP type T: Tax | |||
| = | PAYG Withholding (STP data) | |||
To reconcile your superannuation, you'll need to calculate various columns of data in both the Advanced Payroll Activity Report and the STP report and confirm that your calculated totals match.
If your totals for each report do not match, please refer to the troubleshooting section below for the next steps.
Superannuation (payroll data) = Superannuation (STP data)
The table below identifies which columns need to be included in your calculation to work out the total for each report.
- The table on the left is for the Advanced Payroll Activity Report and should be calculated separately.
- The table on the right is for the STP Report and should be calculated separately.
Advanced Payroll Activity Report |
STP Report |
|||
| Super Guarantee | Super liability | |||
| + | Salary Sacrifice | + | RESC | |
| + | Employer Additional Super Contribution | = | Superannuation (STP data) | |
| = | Superannuation (payroll data) | |||
Additional processes
Outside of reconciling your values, it is also a good idea to ensure that you are reporting payroll items correctly. The items that are worth checking are the ones that are customisable. These include:
- Leave entitlements
- Deductions
- Pay items and allowances
These items can be checked before your reconciliation process, which will give you the confidence that you are reconciling the correct data.
You can simply review the respective menus for leave entitlements and deductions. However, for allowances, it is recommended that you refer to the Pay Item and Allowance schedule, as this will save you a lot of time.
While your reconciliation may balance, some employees may have 2 income types recorded. There are instances where this is OK, but most of the time, it has been done in error.
The following steps outline how to identify employees with 2 income types. Once you have identified these, you can decide whether this is accurate or needs to be resolved.
To identify employees with multiple income types:
- Navigate to Reports > Financial and open the Advanced Payroll Activity Report.
-
Run the payroll report with the following settings:
- Set your duration to 'Last Financial Year' (assuming you run this report after June 30).
- Group by Employee ID and Income Type.
- To the right, select the 'cash basis' checkbox.
- Run the report and Export to CSV.
- Open the CSV and locate duplicate employee IDs.
- In Excel, highlight the Employee ID column.
- Apply Conditional Formatting to Highlight Duplicate Values.
- You can optionally filter your data and the highlighted cells.
- The highlighted (duplicated) cells are employees with WHM and SAW data recorded.
If you determine that any employees with 2 income types are in error, this can be rectified from the employee profile. Please refer to this article for instructions on how to resolve this.
Once you have completed the reconciliation of your Advanced Payroll Activity Report (APAR) and STP Report, any discrepancies should be investigated and resolved. The following checks will help you identify the source of the variance and ensure your payroll records match the figures reported to the ATO through STP.
Please follow the process below:
- Determine what is incorrect.
- Is the data in the Advanced Payroll Activity?
- Is the STP data correct?
- Determine which employees' data is wrong.
- Determine which payslips are causing the discrepancy.
- Determine which line items are causing the discrepancy.
- The Advanced Payroll Activity Report with additional groupings of Line Item and Payslip will help to identify this.
- The STP Report, looking at the line item data for the employee, is another good option for investigating discrepancies on an employee-by-employee basis.
- Once identified, determine whether it's something you can resolve yourself (i.e., by creating adjustments or updating STP categories) or if the matter requires assistance.
This article has information on resolving the most common issues encountered.
When requesting assistance from support with a reconciliation discrepancy, please include all details of the discrepancy you have identified and relevant supporting details, such as:
- Your spreadsheets with workings
- Confirmation of what value is correct and what is incorrect (payroll report or STP)
- Details of each employee with the affected payslips or line items
Including all the required information will mean the support team can investigate your query sooner.