Processing Employee Payment Summaries in Xero

As an employer, one of the end of year requirements is to provide your employees with an annual payment summary.  These need to be in your employee's hands no later than 14 July with the annual report to be filed with ATO by 14th August.

Xero makes the process very simple but before you send them off, you just need to follow these steps.

Review your payroll data with the general ledger for any errors before generating your employee’s payment summaries

Run the Payroll Activity Summary report and make sure you select all employees and the financial year you're checking.

Run the General Ledger Report, select the financial year and sort by Account Name. Both theCash Basis and Show YTD fields should be clear.

Use the following table to check your payroll data by matching the report balances in your Payroll Activity Summary report and the General Ledger Report.

Matching report balances

In your Payroll Activity Summary                                   In your General Ledger Summary

Total Earnings                          should match                    Total Wages and Salaries

Total Super                               should match                    Total Superannuation

Total Tax                                   should match                    Total PAYG Withholding Payable

If balances don't match check your Pay Run History to find the pay run with the error and process an adjustment using an Unscheduled Pay Run.

Prepare and distribute employee payment summaries

Xero automatically prepares and allocates your payroll data to your employee's individual non-business payment summaries. Review these amounts before you finalise them and send off your annual reports to the ATO.

  1. Go to Payroll, click Employees, then Payment Summaries.
  2. Check that your organisation name, ABN and postal address information is correct. You can update this information in Organisation Settings.
  3. Enter the signatory name and add the contact number, then click Confirm and Continue.
  4. Select the Financial Year Ending.
  5. Review gross payments, PAYG, allowances, workplace giving, union/association fees, RESC and Lump Sum amounts allocated based on your payroll data.
  6. Identify and fix any payment summary errors.
  7. Enter any RFBA from your fringe benefits tax return to each employee where needed.
  8. Enter any additional Lump Sum amounts paid. This will reduce your employee’s gross wages to ensure the amounts aren't duplicated.

  9. Select all employees.
  10. Click Publish.

You can now email the payment summaries to your employees or download and print a PDF.  Employees can also access from My Payroll if you have invited them to use this feature.

Submit payment summary report to the ATO

Lodge the payment summary report through Xero, or download and lodge the report through the ATO portal.

Note: If your organisation has 99 or more payment summaries, you need to download the EMPDUPE file and lodge the report through the ATO portal.

Lodge the report to the ATO through Xero

  1. Go to  Payroll, then click Employees.
  2. Click Payment Summaries.
  3. Click Confirm and Continue.
  4. Select all employees and click File Now.
  5. Select if you are an agent lodging this information on behalf of another business.
    • If you click Yes, you’ll need to add your agent details.
  6. Select the Authorisation To File declaration check box.
  7. Click File Now.

The annual report is filed at the ATO if all payment summaries are accepted. If it can't be filed, you'll need to fix the relevant payment summaries and submit the file again.

Once you've sent the annual report to the ATO, your end of year payroll process is complete.

Download and lodge the report through the ATO portal

  1. From the Payment Summaries screen, select all employees.
  2. From the File Now list, click Create EMPDUPE.
  3. Click Yes to include the agent details and enter the relevant information.
  4. Click Create EMPDUPE. The file is downloaded to your computer.
  5. Upload the file to the ATO Online Portal.