Mark looked at the calendar. 14 June. STP finalisation was due in exactly one month.

"I don't even know what that means," he said.

"Single Touch Payroll finalisation," Tessa said. "It's when we tell the ATO these are the final wages figures for the year. Once we do it, those numbers are locked in."

"And if we get it wrong?"

"Then we get to explain to the ATO why we got it wrong."

STP finalisation is one of those things where getting it right the first time beats trying to fix it later.

What is STP Finalisation?

Single Touch Payroll (STP) is how you report wages, super, and PAYG withholding to the ATO. Every time you run payroll, Xero sends information directly to the ATO in real-time.

But at the end of the financial year, you need to finalise it. You're telling the ATO: "Here are the final wage figures for FY26. These are locked in. No more changes."

Due date: 14 July 2026

Once you finalise, those numbers are fixed. You can't unfinalise without calling the ATO. So get it right the first time.

What You're Checking Before You Finalise

1. All June pays are processed

Go to Payroll > Pay Runs and confirm the final pay run for 30 June is processed. If it's still in draft, finalise won't work. Process all outstanding pays first.

2. Employee details are correct

Go to Payroll > Employees and check each employee:

• Tax file number (TFN) – correct and current?
• Address – up to date?
• Employment dates – accurate?
• Super fund details – current fund name and account number?

The ATO matches on TFN and address. Get these wrong and you'll have errors.

3. Year-to-date figures compare to other reports

Run a Payroll Summary report for 1 July 2025 - 30 June 2026. Check:

• Total wages for each employee (does it match what you paid?)
• Total super (should be 12% of ordinary time earnings)
• Total PAYG withholding (reasonable given the wages?)

Compare these amounts with other reports – Profit & Loss Wages & Salaries totals for the year, and Balance Sheet amounts.

If you are all paid up to date, PAYG & Super should only show what’s owing for the final month or quarter.

Common mistakes: super calculated on wrong amounts, PAYG way higher/lower than expected, employees who left months ago still showing on the summary.

4. STP reporting has been sent all year

Check Payroll > Single Touch Payroll > STP Reporting for any warnings or errors. If there are unresolved issues, contact the ATO before you finalise. Don't lock in errors.

How to Finalise STP in Xero

Step 1: Go to Payroll > Single Touch Payroll > Finalise

Step 2: Review the summary Xero shows you (total wages, super, PAYG withholding, allowances). Check these against your payroll summary report. If they don't match, go back and investigate first.

Step 3: Confirm every employee's details are correct (wages, super, PAYG, TFN, address). Fix any errors before proceeding.

Step 4: Click to lodge the finalisation declaration. Xero submits to the ATO. You'll get confirmation it's been lodged.

Step 5: Generate payment summaries for your employees. Go to Payroll > Payment Summaries. These show each employee their income, tax withheld, and super contributions for the year. They need these to do their tax returns.

After You Finalise

By 28 July – Pay any outstanding super for the June quarter. Unpaid super attracts penalties and you can't claim the deduction.

By end of September – Provide payment summaries to employees if you haven't already.

Common STP Mistakes To Avoid

Wrong TFN or address – Causes problems when the ATO tries to match the data.

Finalising too early – Don't do it before 30 June. If you finalise on 28 June and then need to process a final pay on 30 June, you're stuck.

Including/excluding the wrong people – If you're on payroll as an employee or director, you need to be included. Don't leave yourself off.

Finalising with errors – If there are discrepancies between your payroll records and what Xero is showing, fix them first. Don't finalise hoping to sort it out later.

Missing the super deadline – You can finalise STP but still owe super. The super payment deadline is 28 July, not 14 July.

Your Checklist

This week:

☐ Check all June pays are processed

☐ Review employee records (TFN, address, super fund)

☐ Run payroll summary and check figures against other reports

Next week:

☐ Check for STP reporting errors

☐ Investigate any discrepancies

☐ Get employee details finalised

Before 14 July:

☐ Lodge STP finalisation

☐ Generate payment summaries for employees

☐ Schedule super payment for 28 July

Get it right the first time. Don't finalise with errors hanging over you.

For the official ATO requirements, read the End-of-year finalisation through STP guide.

Want hands-on guidance?

Every year in June, we spend two weeks in the weekly co-working meetups focused on wage reviews before STP reporting. It's a great time for you to bring your questions, we work through them together, and you leave knowing your figures are sorted before 14 July.

If you want some practical support getting your STP ready, join us in Unexpected Bookkeeper.

Disclaimer: This information is general in nature and doesn't take your personal circumstances into account. Always seek professional advice for your specific situation.