Small employers (19 or fewer employees) are exempt from reporting closely held payees through Single Touch Payroll (STP) until 30 June 2021. You don’t need to apply for this exemption.
From 1 July 2021, closely held payees will need to be reported through STP. You have the option to report this information on a quarterly basis.
If you have any other employees (also known as arm’s length employees) they must be reported on or before each payday.
STP reporting for closely held payees
Small employers with closely held payees were exempt from reporting these payees through STP for the 2019–20 and 2020–21 financial years. From 1 July 2021, you must report payments made to closely held payees through STP.
A closely held payee is an individual who is directly related to the entity from which they receive payments, for example:
- family members of a family business
- directors or shareholders of a company
- beneficiaries of a trust.
You must continue to report information about all of your other employees (known as arm’s length employees) via STP on or before each pay day (the statutory due date).
If you only have closely held payees you are not required to start STP reporting until 1 July 2021. You do not need to tell us that you only have closely held payees.
Ways to report your closely held payees
From 1 July 2021, you can report payments to closely held payees through STP in any of the following ways:
- Report actual payments on or before the date of payment – whenever you make a payment to a closely held payee, report the information on or before each pay event.
- Report actual payments quarterly – report your actual payments to closely held payees quarterly. Each quarter, when your activity statement is due, report all payments made in that quarter.
- Report a reasonable estimate quarterly – report amounts equal to or greater than a percentage of gross payments and tax withheld from the latest year, across each quarter.
Report actual payments quarterly
Small employers can choose to report any closely held payees on a quarterly basis.
If you choose a quarterly reporting option for your closely held payees, your quarterly STP report is due on or before the due date for quarterly activity statements. This is inclusive of any concessions which may apply to your circumstances.
This quarterly option does not change the due date for:
- notifying and paying your pay as you go (PAYG) withholding on your activity statement
- making super guarantee contributions for your closely held payees.
You must continue to report information about all of your other employees via STP on or before pay day.
If you are a medium withholder reporting your PAYG withholding monthly, you need to determine the quarterly activity statement due date that applies to your circumstances.
Report a reasonable estimate quarterly
This reporting option allows you to report reasonable year-to-date amounts for your closely held payees quarterly.
We will remit any failure to withhold penalty you may incur if you:
- report year-to-date withholding amounts and tax withheld for a closely held payee that is equal to or greater than 25% of the payee’s total gross payments and tax withheld from the previous finalised payment summary annual report (PSAR) across each quarter of the current financial year in your quarterly STP reports
- report and pay the tax withheld to us on time.
It is important you do not under-estimate amounts reported for your closely held payees. If we review your tax affairs and identify that you made payments to closely held payees equalling more that 25% of their total gross payments for the last financial year and did not report this through STP, you may:
- be liable for super guarantee charge (SGC) and have to lodge SGC statements, if you did not make sufficient contributions during a quarter
- not be able to deduct the payment you made for income tax
- be liable for penalties and interest.
It is important that your quarterly STP reports are a true and correct representation of your PAYG withholding and super guarantee obligations for that quarter at the time they are lodged.
