As the 2025 financial year draws to a close, Australian employers using XERO must ensure their Single Touch Payroll (STP) data is finalised accurately and on time. This task is more than a compliance formality—it’s a critical step in supporting your employees’ tax obligations and staying in line with Australian Taxation Office (ATO) requirements. In this comprehensive guide, we’ll walk you through everything you need to know to finalise your STP data in XERO, including a clear step-by-step process, key deadlines, compliance tips, and troubleshooting support.
What Is Single Touch Payroll (STP)?
Single Touch Payroll is an ATO initiative that streamlines reporting by requiring employers to submit payroll data—wages, PAYG withholding, and superannuation—each time they run a pay cycle. With STP Phase 2 now in effect, businesses also need to report more detailed employee information. The end-of-financial-year (EOFY) finalisation in XERO confirms this data and replaces the need to provide employees with payment summaries.
Why Finalisation Matters
Finalising your STP data ensures that:
- Your employees’ income statements are marked as “Tax ready” in their myGov accounts.
- The ATO receives accurate data for tax return purposes.
- Your business avoids penalties for late or incorrect submissions.
Step-by-Step: How to Finalise STP in XERO for FY2025
Here is a detailed breakdown of the steps you should follow to finalise Single Touch Payroll data in XERO:
1. Ensure All Pay Runs Are Filed
Before you start the finalisation process, confirm that every scheduled and unscheduled pay run for the 2024–2025 financial year (ending 30 June 2025) has been posted and filed with the ATO via XERO.
Tip: Use the Pay Runs summary under XERO’s Payroll section to confirm completion.
2. Access the STP Finalisation Area
- Navigate to the Payroll menu.
- Select Single Touch Payroll.
- Click the Finalisation tab.
This is where you’ll see all employees who have been paid during the financial year.
3. Select Employees to Finalise
- Choose All Employees if you are finalising for everyone.
- Alternatively, select individual employees if you’re finalising in batches.
Ensure that terminated employees are also included.
4. Review Employee Year-to-Date Data
For each employee:
- Click the menu (three dots) next to their name.
- Select View details.
- Confirm year-to-date wages, PAYG withholding, superannuation contributions, and lump sums.
Make any corrections through an unscheduled pay run before proceeding.
5. Add Reportable Fringe Benefits (If Applicable)
If your employees received reportable fringe benefits (RFBs) or exempt benefits, enter the respective amounts in the relevant fields. This is essential for accurate ATO reporting.
6. Verify Lump Sum Payments
Check and correct any lump sum amounts (e.g. unused leave on termination). These should be properly classified to avoid ATO discrepancies.
7. Save, Proceed, and Finalise
- After reviewing, click Save and then Next.
- Once all employees are reviewed, tick the box next to Employees to select all.
- Click Finalise.
This sends your EOFY declaration to the ATO.
8. Monitor Status
XERO may take up to 72 hours to update the finalisation status. You’ll see confirmation once complete.
Employees will receive a notification via myGov once their income statement is tax-ready.
Important Deadlines
- Deadline to Finalise STP: 14 July 2025
- Recommended Start: As early as 1 July 2025, once all pay runs are filed
- Superannuation Cut-off: Approve Auto Super batches by 2:00 PM AEST on 14 June 2025 if you intend to claim deductions this financial year
Compliance Checklist
To avoid delays or errors during finalisation:
- Verify that all employees have complete profiles: date of birth, tax file number, email, address, and postcode.
- Ensure income types (e.g. salary and wages, working holiday makers) and tax scales are defined.
- Use the Employee Contact Details and Pay History reports to cross-check data.
Common Issues and Troubleshooting
Missing or Incorrect Data
- Use an unscheduled pay run to fix mistakes and re-file before finalisation.
Status Doesn’t Update
- Wait 72 hours, then check again.
- If still pending, contact XERO support or the ATO.
Can’t See Finalisation Tab
- Ensure you have the right permissions and that STP Phase 2 setup is complete.
Additional Notes on Superannuation
Even though super is not directly finalised through STP, timely payment is essential:
- To claim deductions in FY2025, payments must be received by super funds by 30 June 2025.
- Allow up to 10 business days for processing by clearing houses.
Tools to Assist You
- XERO Payroll Reports: Use these for reconciliation and verification.
- ATO Portal: Confirm submissions or correct reporting issues.
- Accountant or BAS Agent: For expert assistance and compliance confidence.
Finalising Single Touch Payroll data in XERO for the 2025 financial year doesn’t have to be daunting. With careful preparation and timely action, you can meet your obligations, support your employees, and avoid last-minute stress. Remember to check for any updates from XERO or the ATO closer to EOFY, and seek professional advice if anything seems unclear.
By following this guide and maintaining accurate records throughout the year, you’ll ensure a smooth and compliant EOFY finalisation process.
