STP Reporting Required for Closely Held Payees

Single Touch Payroll reporting will be required for closely held payees from 1 July, 2021, at the conclusion of a one-year exemption granted during the Covid-19 pandemic last year, the Australian Tax Office has announced.

The ATO said small employers (those with 19 or fewer payees) can report payments to closely held payees through Single Touch Payroll (STP) in one of three ways:

1. Report actual payments on or before payment date
2. Report actual payments quarterly, to be due on or before the due date for quarterly business activity statements (BAS); or
3. There is the option to report a reasonable estimate quarterly. That means reporting amounts equal to, or greater than a percentage of gross payments and tax withheld from the latest year, across each quarter.

The ATO said employers can choose which reporting method best suits their circumstances. If you elect to report actual payments, you should report either quarterly or on or before the date of payment.

A closely held payee is an individual directly related to the entity from which they receive payments, such as family members of a family business; directors or shareholders of a company, and beneficiaries of a trust.

As you would for any other employees, known as arm’s length employees, employers must still:

• Include any pay as you go (PAYG) withholding amounts on your activity statement and pay the amount owed to the ATO by the due date

• Make super guarantee (SG) contributions for your closely held payees before the quarterly due date.

Employers must continue to report information about arm’s length employees via STP on or before each payday (the statutory due date).

While a finalisation declaration for arm’s length employees is required by 14 July each year, the ATO will allow employers with closely held payees up to the due date of the payee’s income tax return to make a finalisation declaration.

Keep in mind that Single Touch Payroll reports will need to be lodged through an STP-enabled solution. They cannot be lodged through the ATO portals or through a BAS.

For any assistance with Single Touch Payroll, or to discuss the payment options for closely held payees, ring Hood Sweeney Accounting & Business Advisory on 1300 764 200.