To do a Payroll Year End in Xero You can use Xero to process your employees' individual non-business payment summaries and send the annual report to the ATO. To help you complete your end of year payment summaries correctly, here's a checklist for you to follow. Do these things before starting the process 1. Check all pay runs for the year are complete Make sure all payments made to your employees up to and including 30 June have been included in a posted pay run. The pay period of a pay run is unimportant when it comes to end of year payment summaries. It's the payment date of your pay runs that determines the financial year they're reported in. 2. Reconcile payroll to general ledger It's important that your accounts have been updated and match with the pay runs you've completed. We call this reconciling payroll to the general ledger. We need to check that the total earnings, total superannuation and total tax amounts match. Get year-to-date payroll balances by running the Payroll Activity Summary report, selecting all employees and the full financial year. To run the report, take the following steps. 1. On the Reports menu, click All Reports. 2. Under the Payroll Reports section, click Payroll Activity Summary. 3. From Employees, select whether to show all employees, a specific employee, or a group. 4. From Date Range, select a period or specific date range to report on. Include a pay run's pay day to view it in the report 5. Click Update to run the report. 6. You may wish to print or download it so you can compare it alongside the General Ledger Summary.
Get year-to-date general ledger balances by running the General Ledger Summary report for the full financial year. GL Report is found in Reports All Reports You may wish to print or download it so you can compare it alongside the Payroll Activity Summary.
Check payroll balances against general ledger balances Looking at your Payroll Activity Summary and your General Ledger Summary reports, compare balances to make sure they match. In your Payroll Activity Summary... Total Earnings Total Super Total Tax should match should match should match In your General Ledger Summary... the net movement of all accounts you have posted to any earnings expense accounts the net movement of the superannuation expense account the total credit amount of the PAYG Withholding liability account If any balances do not match, we recommend you review your accounts and payroll to identify and correct any discrepancies. If you need help, please contact a Xero accounting partner.
3. Review the employee payment summary amounts The next step is to check that specific pay components have been recorded correctly in payroll because they automatically update the payment summary. Run the Payment Summary Details report which shows employee payroll information as it will be displayed on payment summaries. You can use it to identify amounts that will be included on your employee s payment summaries or verifying any Lump Sum or RFB amounts. To run the report, take the following steps. Next, you can: Go to Reports > All Reports. From the Payroll Reports section, select Payment Summary Details. From Employees, select whether to show all employees, a specific employee, or a group. From Financial Year, select the financial year you want to report on. Click Update to run the report. group results hide columns filter by search widen report view export to PDF or Excel print. From Employees, select all employees. From Date Range, select the financial year you are reporting. Review the amounts for each employee, paying particular attention to: Allowances RESC (Reportable Employer Superannuation Contributions) Workplace giving Union fees If amounts are in these areas that shouldn't be there, or you think there are amounts missing, you need to correct them.
Correcting common mistakes The most common mistakes people want to correct on payment summaries is where amounts are not reported where they expected. This can relate to: Allowances & gross wages You might identify that amounts included under Allowances on the payment summaries should be included under Gross Wages (or vice versa). Identify the amounts that are being incorrectly reported. If the correction is to report an amount as an allowance, create a new earnings rate of the type Allowance. If the correction is to report an amount as gross wages, select Ordinary Time Earnings. Add, edit, or delete pay items You may also want to rename the original earnings rate so you don't accidentally use this going forward. Don't change the earnings type of the original pay items. This will only change the reporting of the pay item from the next time the pay item is used. Previously posted pay runs will not change. After you've added a new earnings rate, reverse any amount to the earnings rate that you have processed incorrectly and re-enter them using the new earnings rate created. Create an unscheduled pay run You can run a Transaction Listing Summary report for the employee to help identify total amounts to reverse. RESC Workplace giving or union fees RFBA or lump sum Transaction Listing Summary report To run the report, take the following steps. 1. On the Payroll menu, click All Reports. 2. From the Payroll Reports section, select Transaction Listing Summary. 3. From Employees, select whether to show all employees, a specific employee, or a group. 4. From Date Range, select a period or specific date range to report on. 5. From Pay Item Type, select a type of pay item (for example, Earnings). Then from Pay Item, select a specific pay item (for example, Ordinary Hours). 6. Click Update to run the report. Once you have finished correcting any anomalies, you are ready to produce your payment summaries.
Produce end of year payment summaries Publish and distribute your employees' end of year payment summaries and send the annual report to the ATO using payroll in Xero. Only start the payment summary process once you have completed your end of year financial payroll requirements. 1. Check your organisation and authoriser details On the Payroll menu, click Employees. Then, click Payment Summaries. Check the organisation details and signatory details are correct, as they are to be reported on your employee payment summaries and to the ATO. You can update the signatory name, phone and fax number as you require on this screen. If the organisation name, ABN or address details need updating, you need to go into Organisation Settings to correct them. Make sure your postcode and state are in the standard format. Organisation Settings Go to Settings > General Settings > Organisation Settings. Once the details are correct, click Confirm and Continue. 2. Check the payment summary filters Year Ending: the year you have selected to view, publish and process employee payment summaries for 3. Enter reportable fringe benefit amounts The ATO state that if you provide certain fringe benefits with a total taxable value of more than $2000 to an employee in a FBT year, you need to report the grossed-up taxable value of those fringe benefits on the employee's payment summary for the corresponding income year. These are called reportable fringe benefit amounts (RFBA). Enter the required amounts to the RFBA field for each employee. 4. Enter lump sum amounts If you've paid an employee lump sum amounts during the year, you will need to manually enter these amounts into each payment summary. You should have created specific pay items for lump sum payments. You can use the Transaction Listing Details report to find the transactions associated with these specific pay items for each employee. Once you've identified the lump sum amounts for each employee, you are ready to enter the lump sum amounts into the relevant field on their payment summaries.
1. Click on the Lump Sum column header to edit lump sum payment amounts. 2. Enter the amounts to the applicable lump sum option (A, B, D or E). 3. For lump sum A amounts, you must apply a termination type: R or T. o R - payment for genuine redundancy, invalidity or under an early retirement scheme o T - payment for any other reason. Any amounts entered in the lump sum fields will reduce the employee's gross wages. The lump sum field value will be displayed on the employee's payment summary. 5. Publish employee payment summaries Publishing: Locks your payroll year down Gives employees access to their payment summary within My Payroll. Before you publish, select employees' check boxes and click Preview. Once you've reviewed your employees' payment summary values and ensured they are correct, you are ready to publish. 1. Select employees whose payment summaries you want to publish. 2. Click Publish. You can now distribute payment summaries to employees. 6. Distribute payment summaries to employees You must distribute payment summaries to your employees by 14 July. Xero enables you to do this by: My Payroll Employees who have My Payroll access will have their payment summary automatically uploaded to their My Payroll when it is published. The payment summary will be available for the employee to download from My Payroll. Invite employee into Xero to access My Payroll (optional) Follow these steps to invite an employee to access their own payroll details. The invite will go to the email address you entered for them on the employee's Details tab. 1. On the Payroll menu, click Employees. 2. Click the check box next to the employee's name. You can only select employees that have an email addresses added. 3. Click Invite to My Payroll.
You can select multiple employees, as long as they have an email address. The employee will receive an email inviting them to log into Xero or to set up a Xero account. The employee is added as an additional Xero user in your organisation, with the Payroll Employee user role. Email Invite employee into Xero to access My Payroll (optional) Follow these steps to invite an employee to access their own payroll details. The invite will go to the email address you entered for them on the employee's Details tab. 1. On the Payroll menu, click Employees. 2. Click the check box next to the employee's name. You can only select employees that have an email addresses added. 3. Click Invite to My Payroll. You can select multiple employees, as long as they have an email address. The employee will receive an email inviting them to log into Xero or to set up a Xero account. The employee is added as an additional Xero user in your organisation, with the Payroll Employee user role. Print You can make a printable PDF of employee payment summaries. Select employees/select all employees > Send to Employee > Generate PDF for printing. Employees who have had payment summaries printed or emailed will show an icon under their status column. 7. Send annual report to the ATO The ATO must receive the payment summary annual report by 14 August. This can be done from within Xero using your AUSkey or by downloading the EMPDUPE file from Xero and sending it to the ATO. AUSkey (Australian Business Register website)
Submit Payment Summaries directly to the ATO You can only submit payment summaries directly to the ATO if your organisation has 99 or fewer employees. 1. On the Payroll menu, click Employees, 2. Click Payment summaries. 3. Select all employees by clicking the check box in the column heading. You can also select individuals by clicking the check box before their name. 4. Click Send to ATO. 5. Click Submit Payment Summaries directly to ATO using Xero. 6. If you would like to include supplier details to the ATO, click Yes. 7. Click Browse to locate and open your AUSkey. To find your AUSkey go to Backup your AUSkey (Australian Business Register website) AUSkey compatibility (Australian Business Register website) 8. Select the Authorise to file. 9. Enter your AUSKey password and click File Now. If you get the message, The password is invalid for this credential store, this is referring to the AUSkey password. If you need to amend an employee's payment summary, you must wait until the status changes to accepted or rejected before you are able to unpublish. If an employee s payment summary is in a status of Rejected by ATO, the user who submitted the file will receive an email advising them there is a problem. The errors can be resolved by going to the Payment Summaries page to view and fix the problems. You will need to submit the file again once the errors are resolved. Send EMPDUPE file to the ATO You can only download the EMPDUPE file when all employees paid in the year have been published. 1. On the Payroll menu, click Employees, 2. Click Payment summaries. 3. Select all employees by clicking the check box in the column heading. You can also select individuals by clicking the check box before their name. 4. Click Send to ATO. 5. Click Create an EMPDUPE file to send via ECI software. 6. To include supplier details to the ATO, click Yes. 7. Type in all supplier information and then click Create EMPDUPE. The file is downloaded to your computer. You can send the EMPDUPE file to the ATO by one of these options: ATO Online Portal ATO ECI (electronic commercial interface) software Electronic media storage, for example, USB stick, CD or DVD (the ATO is planning to close this option). You must also complete and send the ATO's electronic storage media information form with this option.
7. Send annual report to the ATO The ATO must receive the payment summary annual report by 14 August. This can be done from within Xero using your AUSkey or by downloading the EMPDUPE file from Xero and sending it to the ATO. AUSkey (Australian Business Register website) Submit Payment Summaries directly to the ATO You can only submit payment summaries directly to the ATO if your organisation has 99 or fewer employees. 1. On the Payroll menu, click Employees, 2. Click Payment summaries. 3. Select all employees by clicking the check box in the column heading. You can also select individuals by clicking the check box before their name. 4. Click Send to ATO. 5. Click Submit Payment Summaries directly to ATO using Xero. 6. If you would like to include supplier details to the ATO, click Yes. 7. Click Browse to locate and open your AUSkey. To find your AUSkey go to Backup your AUSkey (Australian Business Register website) AUSkey compatibility (Australian Business Register website) 8. Select the Authorise to file. 9. Enter your AUSKey password and click File Now. If you get the message, The password is invalid for this credential store, this is referring to the AUSkey password. If you need to amend an employee's payment summary, you must wait until the status changes to accepted or rejected before you are able to unpublish. If an employee s payment summary is in a status of Rejected by ATO, the user who submitted the file will receive an email advising them there is a problem. The errors can be resolved by going to the Payment Summaries page to view and fix the problems. You will need to submit the file again once the errors are resolved. Send EMPDUPE file to the ATO You can only download the EMPDUPE file when all employees paid in the year have been published. 1. On the Payroll menu, click Employees, 2. Click Payment summaries. 3. Select all employees by clicking the check box in the column heading. You can also select individuals by clicking the check box before their name. 4. Click Send to ATO. 5. Click Create an EMPDUPE file to send via ECI software. 6. To include supplier details to the ATO, click Yes. 7. Type in all supplier information and then click Create EMPDUPE.
The file is downloaded to your computer. You can send the EMPDUPE file to the ATO by one of these options: ATO Online Portal ATO ECI (electronic commercial interface) software Electronic media storage, for example, USB stick, CD or DVD (the ATO is planning to close this option). You must also complete and send the ATO's electronic storage media information form with this option.