ATO requirements are that all salary and wage payments must be reported in the financial year they are received (i.e. paid to your employees).
If BOTH the PPE date and the Payment Date to employees are in the same financial year, no action is required. The payment of pay period ending 30/06/2020 should leave your bank account on 30th June 2020 if you want to fall within this financial year by the bank cut off times.
The last day of the 2019/2020 financial year falls on Tuesday 30th June. So, if your company has a PPE on or before 30 June 2019 where the payment to staff will be received on or after 1 July 2020, this payment needs to be reported in the new financial year 2020/2021, not the 2019/2020 financial year.
Year-End Boundaries for End of Financial Year
Determining Taxation Year End Boundaries for End of Financial Year.
If the pays for the last PPE date in June is paid to employees in June, then no action is required;
The first PPE date in July is paid to employees in July, no action is required.
Important points to note:
- If changing the year end boundaries for the taxation year, please consider carefully the date you are selecting. The system will not allow you to change the year end boundaries date a second time for the same Financial Year.
- DO NOT change the Period End boundary if the pay period ending date and the payment date are in the same financial year.
- Create a BACKUP before you change the “Period End Boundary”.
- By default, the “Period End Boundary” will be 01 July – 30 June for each Financial Year.
- This procedure is ONLY required in instances where either the Pay Period ending date falls on or before 30/06/2020 but the Employees are not physically paid their wages until July 2020, or the pay period ending date falls on or after 01/07/2020 but the employees are paid in advance their pays in June 2020.
- Once a pay cycle (PPE) has been processed past the set Period End boundary date referenced in the Taxation Year Boundaries screen, these dates cannot be changed.
An example of when to change Taxation Year Boundaries:
Your PPE date is 28/06 and the date the money is paid to employees is 01/07, i.e. the PPE date and the payment date is in two different months
Changing the Taxation Year End Boundary (If Necessary)
If you have determined that you do need to change the Taxation Year Boundaries for this financial year end, you can do so in Wagemaster via:
Setup Menu > Preferences > Configuration > Period End > Taxation Year Boundaries > Select and Edit the current FY
Example: The last PPE date for June is PPE 28/06/2020, but the employees will only receive payment on Wednesday 01/07/2020. The end date has been changed to 27/06/2019 (the day before the PPE date that will be paid in July).
If the pays for the first pay period ending date in July are paid to employees in advance before the 1st of July, set the End Date to a date after the appropriate pay period ending date (i.e. the July date) that will cut the Taxation Year Boundary off a day later and ensure the entire pay period is included in the current financial year’s reporting.
Where multiple PPEs (i.e. Monthly and Weekly Pay Periods) are contained within the one Wagemaster Payroll Database
There is a Calendar Month PPE 30/06/2020, processed and paid on 15/06/2020. In addition, there is a Weekly PPE Tuesday 30/06/2020, processed and paid on Wednesday 1st July 2020.
In this example, the Calendar Monthly Cycle would need to be recorded in this current Financial Year, but the Weekly PPE cycle would need to be reported as the first PPE in the next financial year.
In this instance, the recommendation would be to change the Calendar Month PPE Cycle to be a Monthly Cycle that ends 28/06/2020 and then processed as anticipated on 15/06/2018.
To align the Calendar Month, Pay Period Ending to be a Monthly Cycle, go to Setup > Preferences > Configuration > Pay Periods > Calendar Month Cycle > Edit to be a Monthly Cycle with a Pay Period End as 28/06/2020.
In this example, Setup Menu > Preferences > Configuration > Period End > Taxation Year Boundaries > Select and Edit the current FY End Date to be 29/06/2020.
Once the Period End boundary date is set for one year, the following date then automatically filters through to be the Start Date of the next financial year.
In the example above, as the Taxation Year Boundary Period End Date selected is 29/06/2020 for
the last day of 2019/2020 Financial Year, any PPE dates that fall after 29/06/2020 will now be
reported against the new 2020/2021 financial year for ATO Reporting purposes. So, a weekly cycle
PPE of 30/06/2020 will now report in the 2020/2021 Financial Year and not the 2019/2020
After processing End of Financial Year, and before processing the next Monthly
Pay Cycle on 15/07/2020, amend the monthly pay cycle back to the normal.
Frequency: Calendar Month with PPE: Last Day of Month.
File > Company Details > Configuration > Pay Periods > Pay Periods > Monthly > Edit > Change
Frequency back to Calendar Month.
New functionality in the June 2020 release of Sage WageEasy will be this warning message about
year-end boundaries and your final pay for the year. This appears in your system when your
system date reaches June.
This warning will persist in June until you have visited Setup > Preferences > Configuration >
Period End > Taxation Year Boundaries and ticked the box Reviewed Tax Year boundary for the
current financial year.