When an employee leaves your business, you need to let the ATO know the details of the employee's departure. You'll also need to "finalise" the employee which lets the ATO know you won't be paying that employee again.
As part of your Single Touch Payroll (STP) reporting, you need to notify the ATO of the termination. This lets the ATO know the employee's termination date, the reason, and any ETP components in their final pay.
Go to the Payroll menu > Single Touch Payroll reporting.
Click the Employee terminations tab.
Choose the applicable Payroll year and click Add Termination.
Enter the termination details and click Notify the ATO.
When prompted to send your payroll information to the ATO, enter your details and click Send.
This declaration is processed in the same way other STP reports, and it can take up to 72 hours to be accepted by the ATO. You can check the status of the report in the STP reporting centre.