Managing payroll and complying with tax and reporting requirements is a daily outline of payrollers. The Single Touch Payroll (STP) system has brought significant changes to how employers report payroll information to the Australian Taxation Office (ATO). While STP is well-established for most businesses, there are unique considerations for closely held payees. In this blog, we’ll explore STP for closely held payees.
What is a “closely held payee”?
Closely held payees refer to employees who are directly related to the business, such as family members or individuals who hold the majority of the business’s shares. These payees often have a more significant say in the business’s operations and financial decisions.
For example:
- family members of a family business
- directors or shareholders of a company
- beneficiaries of a trust
How should Single Touch Payroll (STP) reporting be done for closely held payees?
Reporting payroll information for closely held payees under STP follows a specific process. Employers must report payments made to closely held payees on or before the date of payment. For closely held payees, the requirement to report on or before the date of payment extends for two years, providing some flexibility for smaller businesses.
*Find more information about STP reporting for closely held payees on ATO.
What needs to be reported for closely held payees under STP?
What needs to be reported through STP depends on how the payment is classified, not who the recipient is. The same person may receive payments during a year that are classified differently.
When reporting payroll information for closely held payees, employers should include the following details:
- Salary or wages
- Tax withheld
- Allowances
- Deductions
- Superannuation contributions
What are the STP reporting options for employers of closely held payees?
Employers with closely held payees have three primary options for reporting their payroll information under STP:
- Report actual payments on or before each payday.
- Report actual payments quarterly, provided that the reporting is done within the due date for the closely held payee’s quarterly activity statement.
- Report a reasonable estimate quarterly.
Employers should choose the option that aligns best with their payroll processes and ensures compliance with ATO requirements.
Read More:
Guide To Single Touch Payroll (STP)
Guide to Single Touch Payroll Phase 2
How Workstem assists you on payroll and STP?
Managing payroll and STP reporting can be complex, especially for businesses with closely held payees. This is where Workstem comes to the rescue. Workstem, your one-stop payroll and HR software, can streamline your payroll processes, including STP reporting for closely held payees.
We offer features that facilitate record-keeping, time tracking, and compliance with employment regulations. With Workstem, you can efficiently manage payroll. Workstem provides a streamlined and compliant approach to handling payroll and STP, which enables businesses to process all in accordance with ATO regulations. Besides, your tax addition and deduction can be customised and auto-calculated based on your rule set.
Take control of your payroll issues with Workstem. Reach out to us now!
