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Single Touch Payroll Closely Held Payees
Reporting closely held payees through Single Touch Payroll becomes mandatory from 1 July 2021 for all employers.
Closely held payees include family members, directors or shareholders of a company or beneficiaries of a trust.
The same data is reported for closely held payees as for all other payees: all year-to-date amounts subject to PAYGW; total gross wages; total withheld amounts; superannuation liability; and any other type of payment required to be reported through STP.
Three Ways to Report Closely Held Payees
Report actual payments on or before the date of payment.
Report actual payments quarterly when the activity statement is due. (Note that you must already have the quarterly reporting concession approved by the ATO – apply for this via ATO online services for BAS agents).
Report a reasonable estimate quarterly. Estimates should be based on amounts equal to or greater than 25% of the previous year’s payments and tax withheld.
The third option allows closely held payees to be included in STP reporting even if actual amounts have not been calculated or paid. Many tax agents calculate salaries, wages, and director fees for closely held payees after the end of the financial year. The quarterly estimate means payees can be included in STP reporting with estimated figures.
It is important not to underestimate the quarterly amounts. The employer may be liable for super guarantee charge, penalties and interest and may have the PAYGW tax deduction disallowed if it is later determined that the business paid a greater amount during that quarter. The ATO will not impose penalties for a failure to withhold if the estimates have been reported, although there may still be a super guarantee charge if the SGC obligation has not been met.
Corrections to payments should be made either by including them in the following STP pay even with updated year-to-date amounts or by lodging an updated event with actual amounts paid and withheld.
STP Finalisation for Closely held Employees
Small employers (19 or fewer employees) with only closely held payees have up until the individual's tax return due date to make the finalisation declaration. The employer will need to check with the individual about the due date of their tax return.
For all other payees, the regular date of 14 July applies for finalisation.
ATO – Closely held payees