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  • Closely held payees

    Small employers (19 or less employees) are exempt from reporting through Single Touch Payroll (STP) for their closely held payees for the 2019–20 financial year. You do not need to apply for this concession.

    From 1 July 2020 closely held payees will need to be reported through STP. You will have the option to report the information about your closely held payees on a quarterly basis. If you have any other employees (also known as arm's length employees) they must be reported each payday from 1 July 2019.

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    Eligibility for the concession

    Only closely held payees are eligible for this concession. A closely held payee is one 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.

    All other employees of an entity (known as arm's length employees) must still be reported on or before pay date (the statutory due date).

    Notifying us of your closely held payees

    If you want to use the quarterly reporting concession from 1 July 2020, you will need to notify us of your closely held payees in late 2019. Instructions on how to do this will be available soon.

    Quarterly STP report due date

    If you report quarterly from 1 July 2020, you will need to send your report for your closely held payees at the same time as you lodge your activity statement.

    The due date for lodgment will be the same as the due date of your activity statement.

    See also:

    Reporting more frequently

    If you are approved to report quarterly but would like to report monthly, you can do so. You should lodge the monthly STP pay event on or before the 21st day of the following month. This is the same due date as monthly activity statements.

    Payments included in the quarterly report

    The quarterly report should include the year-to-date amounts for each of your closely held payees, up to and including the last day of the quarter.

    You will need to make a reasonable estimate of the amounts paid to your closely held payees.

    If you also have arm’s length employees, and you report for them each pay day, you will need to lodge:

    • a report each pay day for your arm’s length employees
    • a a separate quarterly report for your closely held payees.

    However, if you have a quarterly reporting concession for your arm’s length employees, you can report for all of your payees in the one report.

    The quarterly report needs to include your:

    • employees’ year-to-date amounts – up to and including the last pay day of the quarter
    • total gross wages – same as the W1 label on you activity statement
    • total pay as you go withholding – same as the W2 label on your activity statement.

    This quarterly report could be in two formats, either including:

    • each individual pay event for the quarter
    • one pay event which reports the information for the quarter.

    Speak to your STP solution provider to see how they offer quarterly reporting.

    How to calculate the reasonable estimate amount

    You can calculate the reasonable estimate amounts using one of the following methods:

    • Withdrawals taken by the payee. Do not include
      • payments of dividends
      • payments which reduce liabilities owed by the business to the closely held payee.
       
    • Calculating 25% of the total salary or director fees from the previous year (or year of the last lodged tax return of the closely held payee).
    • Vary the previous years' amount of the total salary or directors fees up or down by 15% to take into account current trading conditions.

    These methods are similar to the way you would calculate pay as you go (PAYG) instalments.

    Finalisation declaration due dates

    If you report for your closely held payees on a quarterly basis, you will have up until the due date of your income tax return to make your finalisation declaration.

    Speak to your registered agent about the due date of your income tax return.

    How to lodge the quarterly STP report

    The quarterly STP report needs to be lodged through an STP-enabled solution. You can either lodge the report yourself or have your registered agent lodge on your behalf.

    The STP report can't be lodged through ATO portals. It is not an additional label on your activity statement.

    See also:

    Last modified: 19 Sep 2019QC 59387