STP Reporting for Closely Held Payees

Small employers with 19 or fewer employees didn’t have to report amounts paid to closely held payees until 30th June 2021. Now since the 1st of July 2021, closely held payees are no longer exempt from Single Touch Payroll (STP) reporting. If a business pays certain types of payments to a closely held payees, they must report this payment via STP by the actual payment date.

Who is Closely Held Payee

The ATO states that a closely held payee is an individual directly associated with the business from which they receive payments.

For example:

• Family members of a family business
• Directors or shareholders of a company
• Beneficiaries of a trust

What Types of Payment to Report via STP

ATO only requires certain payments made to closely held payments to be reported via STP.

They include:

• Wages paid or journaled
• Director fees
• Bonuses

Dividends, trust distributions and drawings are not part of STP reporting.

3 Ways to Report STP for Closely Held Payees

How do you comply with these new STP reporting requirements? You can choose to report by one of these methods:

1. Report actual payments by the date of payment
2. Report actual payments quarterly
3. Report a reasonable estimate quarterly

If you have closely held payees in your business, it is more important than ever to work with your accountant and get your year-end wages decision by the 30th June. Having this sorted well before year-end means you get these added benefits:

• Avoid penalties due to late STP report – currently $222 for each 28 days late
• Avoid extra work of having to amend past Business Activity Statement (BAS) and associated interest
• Loss of superannuation deductibility and additional cost of super guarantee charge

To learn more about this, here is the link to the relevant ATO page. However, if you are still unsure, contact us and we would be more than happy to help. 

We help small businesses with their bookkeeping and tax accounting so they can focus on growing their business.