1. PAYG Withholding Reconciliation

Employers must reconcile the total PAYG withholding amounts reported through STP with their Business Activity Statements (BAS) for the full financial year.

Common causes of PAYG discrepancies include mid-year changes to an employee's tax file number declaration, particularly where an employee updated their residency status, claimed the tax-free threshold across multiple jobs, or perhaps failed to submit a TFN declaration altogether, triggering the default withholding rate. Termination payments are another frequent source of error, as lump sum components, including unused annual leave and long service leave, can sometimes carry specific withholding rates that differ from ordinary wages. These transactions can sometimes be entered after the BAS statement has been lodged.

Employers should also review any salary sacrifice arrangements, as incorrectly processed contributions can distort gross wages and the corresponding withholding amounts.

Any discrepancies between what was withheld from employee pay and what was reported or remitted to the ATO should be identified and addressed as a matter of priority.

Note: STP Phase 2 compliance is now mandatory

When the ATO upgraded its payroll reporting system a few years ago, it was split into two phases. STP Phase 2 means that when you report employee pay, you can’t just send through a ‘total’ wage amount, you must itemise it – base salary, overtime, allowances, annual leave, etc.

Every employer should have moved to Phase 2 already, but if for some reason that isn’t the case, it is now urgent that you comply with these STP Phase 2 rules.

2. Single Touch Payroll (STP) Finalisation Declaration

Deadline: 14th July 2026

All employers reporting payroll through Single Touch Payroll must lodge a finalisation declaration with the ATO by 14th July 2026.

Before submitting the declaration:

Reconcile year-to-date payroll figures.

Ensure all pay runs with a payment date on or before 30 June 2026 have been filed through STP.

Correct any discrepancies, missed payments or amended pay runs prior to lodgement.

This declaration confirms that your STP data for the 2025–26 financial year is complete and accurate. Try to ensure your declaration is correct before you hit ‘submit.’ If you find you’ve made a mistake after you’ve submitted, you will have to formally lodge an updated version.

After 1st July and until the finalisation is lodged, employees will see their income statement marked as ‘not tax ready’ in myGov. They won’t be able to complete their individual tax returns until the status shows their pay information as ‘tax ready.’

3. Income Statements in Place of Payment Summaries

Since the integration of STP, employers reporting through the system are no longer required to issue paper payment summaries to employees. Instead, income statements are made available to employees via their myGov account linked to the ATO.

Employers must notify their workforce that income statements are accessible through myGov, and that the status will update to ‘tax ready’ once the finalisation declaration has been lodged. Any employees without a myGov account should be encouraged to create one prior to EOFY to avoid delays in lodging their personal tax returns.

4. Superannuation

Q4 Contribution Deadline: 28 July 2026

The Superannuation Guarantee (SG) rate for the 2025–26 financial year is 12% of ordinary time earnings and will remain at this rate for the new financial year.

Prior to 30th June, employers should:

Reconcile total super contributions against payroll records.

Confirm no superannuation payments have been returned or rejected, and therefore not processed by the employees’ nominated funds.

Note: These types of returns or rejections can be missed, particularly if the person reconciling the bank account is not the same person processing super – it’s possible that the transactions could be allocated incorrectly or ‘put aside’ for following up at a later date.

Check for any SG payments not processed from your bank account by the due date, as these could attract the Superannuation Guarantee Charge (SGC), which is not tax-deductible and includes an administration component and interest.

The Q4 super contribution (for the period 1 April to 30 June 2026) is due to be received in the employees’ super funds by 28th July 2026. Contributions must be received by the employee’s fund by that date - not simply processed from your end.

Only superannuation paid on or before the 30th June can be claimed as a tax deduction in this financial year. Contributions relating to Q4 but paid after EOFY will not be included in this year’s expenses.

5. Payday Super: Prepare Now for 1st July 2026

While the current EOFY obligation is for Q4 super due on 28th July 2026, employers must begin immediate preparation for the Payday Super reform which commences on 1st July 2026.

Under this legislation, superannuation guarantee contributions will no longer be payable quarterly. From 1st July, employers must pay SG contributions on each payday, with contributions required to reach the employees’ funds within seven business days. This is a fundamental shift in super payment obligations and it will affect your cash flow. Plan ahead and be prepared before the new financial year begins.

Importantly, if you have been using the Small Business Superannuation Clearing House (SBSCH), you would have been informed that this facility is closing on 30th June. Many bookkeeping software packages are now designed to pay super directly from your bank account to the correct funds.

But again, we cannot stress enough that planning for this change in legislation is critical for your business.

Remember, meeting these obligations in full and on time is a legal requirement. We’ve said it before, but being prepared for Payday Super is critical for your business’ cash flow and general budgeting.

If you are unsure of any of your obligations or just want to chat through some ways to make the transition easier, give Sue at WestBAS a call. Sue and her team are happy support you through your EOFY requirements.