New Single Touch Payroll rules for 2021

Employers will need to report closely held payees through Single Touch Payroll (STP) from 1 July 2021.

Small employers, which includes businesses with 19 or fewer employees, remain exempt from reporting closely held payees through STP until 30 June 2021. However, from 1 July 2021, you must report payments made to closely held payees through STP.

What is STP?

STP is a streamlined way of reporting to the Australian Taxation Office (ATO) by sending employees’ tax and super information direct to the ATO from your payroll solution each time you pay your employees.

The ATO offers resources to help employers with STP reporting.

What is a closely held payee?

The ATO¹ classifies a closely held payee as 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.

STP reporting for closely held payees

From 1 July 2021, you must report payments to closely held payees through STP in either one of three ways:

What to report

• If you choose a quarterly reporting option, your quarterly STP report is due on or before the due date for quarterly activity statements.
• You need to report actual payments quarterly. 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 the pay as you go (PAYG) withholding tax on your activity statement, or making super guarantee contributions for your closely held payees.

Also, you must continue to report information about all of your other employees (also known as arm's length employees) via STP on or before pay day.

If you choose to report reasonable estimates of year-to-date amounts for your closely held payees quarterly, you must report amounts equal to or greater than 25% gross payments and tax withheld from the latest year, across each quarter of the current financial year in your quarterly STP reports.

You must also report and pay the tax withheld to the ATO on time. It is important not to underestimate amounts reported for your closely held payees.

There may be penalties if the ATO identifies that you made payments to closely held payees equalling more than 25% of their total gross payments for the last financial year and did not report this through STP. Keep in mind this information may be subject to change.

We can help

To learn more, speak with your Relationship Manager today or contact our Employer Services team on 1300 472 282 or employer_help@qsuper.qld.gov.au

1. Australian Taxation Office, Small employers – closely held (related) payees, accessed 5 March 2021 at ato.gov.au