XBert Type: Standard
Accounting Software: Xero, MYOB, QuickBooks Online
Country Restriction: Australia only
Risk Type: Payroll Risk
Business Function: Payroll
Overview
This XBert checks whether a terminated employee has a recorded termination date but no Single Touch Payroll (STP) Phase 2 cessation reason code. Under STP Phase 2 a reason is required before you finalise STP for an employee, so catching the gap early keeps your finalisation compliant and avoids holding up the employee's income statement.
What it does
When an employee is terminated, STP Phase 2 requires you to report a cessation reason code alongside the termination date. The valid codes are V (voluntary), I (ill-health), D (dismissal), R (redundancy), F (contract or job end), C (deceased) and T (transfer to a related entity). This XBert looks at terminated employees in your file and identifies anyone who has a termination date recorded but a blank cessation reason, because an STP finalisation lodged in this state would be non-compliant. Often it simply has not been entered yet and just needs the correct code added before you finalise.
How it works
The XBert raises an alert when it finds an employee with a recent termination date but no STP Phase 2 cessation reason recorded. To keep the alert accurate and avoid false alarms, it only fires when:
the employee has a recent termination date recorded in the file;
no STP Phase 2 cessation reason has been entered for that employee; and
other terminated employees in the same file do record a cessation reason, so a field that simply is not synced is not flagged.
Because the XBert only raises the alert where other terminations in the file carry a reason, it treats a blank reason as a genuine gap rather than a field your payroll system never captures.
Example/Use Case
Priya runs payroll for Hartwell Joinery. Over the year a few staff leave - one resigns, one is made redundant - and Priya carefully records the cessation reason each time. When Daniel's casual role ends in March, the termination date goes in but the payroll screen is closed before the reason is selected, so it stays blank. Months later, at year-end finalisation, the lodgement is flagged as incomplete and Daniel's income statement sits as "not tax ready". Daniel calls because he cannot lodge his tax return. Priya has to reopen the pay run, set the correct cessation reason (F for the end of a fixed-term role) and re-lodge the STP finalisation - all of which could have been avoided with a quick check at the time he left.
Accounting software
This XBert runs on the major Australian-compatible accounting platforms, including Xero, MYOB and QuickBooks Online.
Which countries it supports
Australia only. It uses STP Phase 2 cessation reason codes specific to the Australian Taxation Office.
Processes
This alert sits within your Payroll process and helps ensure terminated employees are reported correctly before you finalise STP. Leaving it unresolved carries real risks:
An STP finalisation lodged without a cessation reason is non-compliant, and the ATO may reject or query the lodgement.
The employee's income statement may be marked incorrectly or remain "not tax ready", which can hold up their tax return.
A wrong or missing reason can affect how a final payment (such as an ETP or unused leave) is taxed, leading to under- or over-withholding.
You spend extra time reopening, correcting and re-lodging the finalisation, and may need to explain the change to the employee.
To resolve it:
Select RESOLVE NOW to open the employee in Xero Payroll, and confirm the termination date is correct.
Set the STP Phase 2 cessation reason that matches why they left: V voluntary, I ill-health, D dismissal, R redundancy, F contract or job end, C deceased, or T transfer to a related entity.
Save the change so it is picked up in your next STP submission.
If the termination was recorded in error, reverse it instead of adding a reason.
Once the cessation reason has been entered (or the termination reversed), mark the XBert as resolved.