Payroll team EOFY prep guide

 

As the financial year draws to a close, payroll departments are gearing up for one of their busiest times. It always seems to come around too quickly and many teams dread EOFY, especially if they do not have a streamlined checklist or haven’t trained employees on this annual exercise.

To help your team get through this process as pain-free as possible, here’s a comprehensive EOFY guide for payroll departments.

Review Business and Employee Details

Before you dive into the EOFY specifics, first ensure all your business details are current, including the Legal/Trading name, ABN and postal address.

Next, accurate employee data is critical. Payroll departments should:

  • Verify employee details – confirm names, addresses, TFN’s and bank details are correct.

  • Update leave balances - confirm all leave balances are accurate and up to date.

Superannuation Guarantee updates

There is a new Superannuation Guarantee (SHG) limit from 1 July 2024 to 11.5%

Actions required:

  • Review TEC contracts - Will their gross be reduced to absorb the increase or adjusted accordingly?

  • Check policy and contracts for information

  • Update your payroll system and audit the increase in the first effective pay period

Reconcile Payroll Accounts

Before the year ends, it's essential to reconcile all payroll accounts.

This involves:

  • Checking PAYG Withholding - Verify all PAYG withholding amounts match the totals reported to the ATO throughout the year.

  • Superannuation Contributions - Ensure all superannuation payments are up-to-date and correctly reported.

Prepare Income Statements

For remaining employees:

  • Single Touch Payroll (STP) Reporting - Ensure all payroll information has been reported to the ATO via STP throughout the year.

  • Income Statements - Finalise and issue Income Statements through STP for all employees by July 14th, which they can access via their myGov account.

Update Payroll Software

Payroll software updates are often released to comply with new regulations:

  • Install Updates - Ensure your payroll software is updated with the latest tax tables and regulatory changes.

  • Review Changes - Familiarise yourself with any changes in the software and how they impact payroll processing.

Review Awards and Agreements

Check that payroll calculations align with current awards and enterprise agreements:

  • Award Rates - Verify all employees are being paid according to the correct award rates.

  • Enterprise Agreements - Ensure compliance with any enterprise agreements in place, including any pay increases or changes to conditions.

Preparation for August changes

Does your business have a plan in place for the new legislation coming into place in August 2024? More to come on those but some items can be cleaned up for the new financial year as a line in the sand.

Annualised Salary Lookbacks

If your employees are Award covered or annualised salary covered have you completed your look back for FY24 and documented the review? Make sure you confirm your look backs have been completed for Annualised Salary compliance.

Allowance reviews

Have you had a look at allowances? We recommend you extract all current allowance tables and analyse the source that derives the allowance rate.

Questions to ask:

  • Are they increased in line with fair work requirements?

  • Do you have 1 July increases in your Agreements?

Minimum Wage, Annualised Salaries, IFAs

Ensure there is a process for preparation of annualising all rate tables in line with the Modern Award increases. Pressure test the better off and annualisation clauses in line with the increases to ensure they are still compliant.

Action items:

  • Analyse the classifications and rate changes to your system including base hours, annual salaries and the like. 

  • Ensure your T&A and HCM software are prepped if integrated with payroll.

Tax Planning

Assist employees and the business in tax planning:

  • Salary Sacrifice Arrangements - Review and adjust any salary sacrifice arrangements for the coming year.

  • Report Fringe Benefits - Calculate and report any fringe benefits provided during the year.

Tax Table Changes

The ATO have released the new co-efficient tables for the FY25 rate tables. Make sure you have this scheduled to update your payroll system. Also but understand the changes in the rates and earnings tables moving forward. Plan some testing of the new rates in a sample of income ranges in your first pay period for FY25. 

Closing out the process

EOFY is a pivotal moment each year that offers the chance to assess, adjust, and plan with a long-term perspective in mind. By taking proactive steps now, you can enter the new financial year with confidence and assurance your EOFY prep has covered all the bases. Wishing you all a smooth EOFY and make sure to celebrate your team for the annual feat once completed.

*Please note the information provided within this article is general of nature and may not be applicable to your business or in your department remit.

 
Andrea Chwalko