About concessional reporting
Eligible employers may have access to concessional Single Touch Payroll (STP) reporting options. These concessions apply only to STP reporting and do not change your PAYG withholding or super guarantee reporting and payment obligations. Your registered agent must apply online for the concession and lodge your STP reports on your behalf.
Micro employer quarterly concession
A micro employer is an employer with 1 to 4 employees – excluding any closely held payees. A closely held payee is someone directly related to the entity, such as a family member, director, shareholder or trust beneficiary. You must report payments to closely held payees through STP.
Who is eligible for the quarterly reporting concession
To be eligible for the quarterly reporting concession, you must meet the following criteria:
- be a micro employer at the time you apply
- lodge activity statements electronically through a registered tax or BAS agent
- use a non-computerised payroll (for example, manual records, spreadsheets or paper)
- have no overdue debts, or be subject to a payment plan
- have all lodgment obligations up to date, deferred or not yet due
- for periods starting after 1 July 2021, meet the exceptional circumstances guidelines.
We may review your quarterly reporting concession if your circumstances change.
Exceptional circumstances
We generally consider it fair and reasonable to grant a deferral to entities where the inability to lodge by the due date is reasonably attributed to exceptional or unforeseen circumstances. These circumstances are set out in PS LA 2011/15 Lodgment obligations, due dates and deferrals. Other unique circumstances are considered on a case by case basis.
When to report
For closely held payees and those with the quarterly reporting concession, the due date is the same as your quarterly activity statement due date or for monthly reporters the due date is the same as your last monthly activity statement for that quarter. If your activity statement has a later due date because of a concession or deferral, your quarterly STP report is also due by that later date. You may choose to report STP monthly where your activity statements are quarterly; your due date is the same due date as monthly activity statements.
If you are approved for the quarterly reporting concession, your agent must lodge your STP report. Closely held employers can lodge themselves or through an agent.
What you need to report
What you report through STP depends on the type of payment.
As with arm’s length employees, you only need to report amounts paid to closely held payees that are subject to PAYG withholding.
You must report individuals as a closely held payee (CHP income type) if you are:
- using a quarterly reporting option, or
- planning to finalise later than 14 July.
You must keep accurate business records to show the type of payments you make to closely held payees. These records help determine whether you have amounts that need to be reported through STP.
Closely held payees
If you have 19 or fewer payees, you may choose to report your closely held payees quarterly without a micro employer quarterly concession.
If you have 20 or more payees, then these arrangements do not apply and you must report any closely held payees in the same way as your arm's length employees.
If you choose the quarterly option, you may:
- report actual payments each quarter when your activity statement is due
- report a reasonable estimate through STP each quarter of the financial year.
As the estimate is based on payments usually subject to PAYG withholding and super guarantee (SG), you must:
- report and pay PAYG withholding on your activity statement based on the estimate
- make SG contributions for closely held payees based on the estimate.
If using the reasonable estimate, when finalising closely held payees you must update your STP report to show the actual year-to-date amount paid during the financial year.
Determining a reasonable estimate
When working out a reasonable estimate, consider your full circumstances and whether you expect them to change during the financial year. Your estimate should reflect the amounts paid to closely held payees for the quarter.
If your circumstances are not materially different from the most recent year you finalised through STP, we’ll generally accept the following year-to-date estimates:
- Quarter 1 – 25% of the total reported in the previous year
- Quarter 2 – 50% of the total reported in the previous year
- Quarter 3 – 75% of the total reported in the previous year
- Quarter 4 – 100% of the total reported in the previous year.
If your circumstances have materially changed, adjust your estimate to reflect those changes. This helps ensure you don’t overpay or underpay your obligations. If an estimate from an earlier quarter was too high, you can reduce your estimate in a later quarter so the year-to-date amount is accurate.
Your estimates were too low
It’s important to avoid under-estimating amounts reported for closely held payees.
If you identify at the end of the financial year that your estimates were too low, you’ll need to:
- revise your Quarter 4 activity statement to include any additional PAYG withholding, and
- pay the additional amount owing.
When you revise your Quarter 4 activity statement, general interest charge (GIC) may apply.
You’ll also need to review your super contributions to ensure you’ve paid enough. You must lodge a super guarantee charge (SGC) statement if your contributions for the year were:
- less than the minimum SG rate, or
- above the maximum contributions base.
Your estimates were too high
If at the end of the financial year your estimates were too high and you have paid too much PAYG withholding, you may:
- revise activity statements to claim back the excess by either
- revising each quarter
- reducing just quarter 4, and working backwards if the excess is higher than quarter 4
- choose to do nothing, your closely held payees will receive a credit for the PAYG withholding amounts related to them when they lodge their personal income tax return.
If you’ve paid too much super, it may be difficult to get a refund from the super fund. If you can’t obtain a refund, you can count the excess towards future super contributions, provided:
- it relates to the same closely held payee, and
- the quarter starts within one year of the date you paid the excess amount.
We won’t apply penalties if your estimates are too low or too high provided your estimates were reasonable based on your circumstances and you paid the amounts owing each quarter.
Correcting information about a closely held payee
If you report quarterly, you have until the due date of your next quarterly STP report to correct a closely held payee’s year-to-date information when you identify an error during the financial year.
If the closely held payee won’t be included in your next quarterly STP report, you must either:
- include the corrected year-to-date amounts in your current quarterly STP report, or
- lodge an Update event by the quarterly activity statement due date with the corrected year-to-date amounts.
Making a finalisation declaration for closely held payees
If you have both closely held payees and arm’s length employees, finalise arm’s length employees by 14 July and closely held payees by 30 September.
If you only have closely held payees, finalise by the due date of the payee’s individual tax return (usually 31 October).
You can finalise at any time during the year, including when a payee ceases.
If you used the reasonable estimate method, update your STP report at finalisation with the actual year-to-date amounts.
Inbound assignees
Multinational employers may transfer employees from an offshore entity to work in Australia for business purposes; these employees are known as inbound assignees. An inbound assignee is employed by a non-resident entity, seconded to Australia, with all or part of their remuneration paid offshore and reported through a shadow payroll arrangement to meet tax, social security and internal equalisation obligations.
Who is eligibility for the concession
You may be eligible for concessional reporting if you are required to report information through STP for an inbound assignee. The concession only applies to employees that are inbound assignee’s and not for payments to employees that are made through an Australian based payroll.
Employers who are not required to report through STP
You will not be required to report through STP if:
- your entity has no Australian presence
- the assignee is on a short-term assignment in Australia
- your entity has been granted a pay as you go (PAYG) withholding variation to nil.
In these cases, you will need to report inbound assignees' PAYG withholding information to us via a payment summary annual report, unless specified otherwise on the variation notice. You should issue a payment summary to the inbound assignee by 14 July.
Understanding the effect of the reporting concession
The reporting concession does not affect the tax treatment of payments to inbound assignees. For example, if you make a payment but don't process this through a shadow payroll until several weeks later, the payment is still deemed to have been made on the earlier date. This is also the date that would apply for PAYG withholding obligations.
However, the concession does provide:
- additional time to gather the information about the payments which needs to be reported
- flexibility in calculating and reporting the payments – reporting a reasonable estimate is sufficient, provided that the estimate is corrected before or at the end of financial year finalisation.
Report due date
Reporting about inbound assignees is due before the last day of the month after the relevant payment was made. For example, if a payment was made on 14 April, it would need to be reported by 31 May.
One month in arrears
If you are reporting through STP in relation to your inbound assignees, you will be permitted to submit each report at any time before the end of the calendar month following the date payment is made to the employee.
This reporting for inbound assignees can be either:
- a separate STP pay event only for inbound assignees
- included in the entity's regular STP pay event for its local employees.
The STP pay event should state the date the payment was actually made to the inbound assignee. If this is not possible, it will be acceptable for the entity to report the same date as the other (local) payments shown in the pay event.
We expect that most entities operating shadow payroll arrangements will be able to report through STP by the end of the next month after the payment date. However, if you can't do so, you will need to request additional time. We will assess requests on a case-by-case basis.
Payments made in June
There are 2 ways you can report payments made in June:
- Lodge a separate pay event for the payments made to inbound assignees in June.
- Lodge an update event which includes the June payments into the year-to-date amounts for each inbound assignee.
The final submission may also be used for the purpose of finalising STP reporting for the financial year. The final submission for a year will be due by the same date as the finalisation is due.
We understand that if you submit June payment information using an update event, you will not submit a pay event during the month of July.
How to apply for additional time
You can apply for additional time through Online services for business by:
- selecting Employees, then STP deferrals and exemptions
- completing the Recurring deferral form with details of the period requested (within the same financial year), additional days needed, number of employees on shadow payroll, payroll software, and selecting Inbound assignees as the reason.
Alternatively, your registered tax or BAS agent can apply on your behalf through Online services for agents by selecting Business, then STP deferrals and exemptions.
Payments included in the report
The 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 your activity statement
- total pay as you go withholding – same as the W2 label on your activity statement. These amounts can be reasonable estimates.
Reasonable estimates
There may be occasions where you do not have the full details of payments made to inbound assignees in time for you to meet your STP reporting obligations. In these situations, you can report a reasonable estimate.
What a reasonable estimate is will depend on the situation. For example:
- If an accurate currency conversion rate is not available, use the latest available rate or an average rate to determine the reportable amounts until the correct rate is available.
- The receipt of information from overseas is delayed, but the employee has previously received a regular monthly salary with minimal adjustment. Report the salary payment in line with the previous pattern. Make any adjustments in a future report when the final information is received.
- There is uncertainty about how to classify an amount within payroll. Make a judgment about whether to include or omit that amount. Make a correction (if required) when the uncertainty is resolved.
Estimated information will need to be corrected when you submit a finalisation declaration for the inbound assignee.
Finalisation declaration due dates
You must finalise your STP information at the end of the financial year. This confirms your data is complete and allows us to set your employees’ income statements to Tax ready.
For inbound assignees, the finalisation declaration can be:
- included in the final pay event, or
- submitted separately using an STP update event.
A finalisation declaration for shadow payroll arrangements must be by 14 August after the end of the financial year.
The concessional date of 14 September ceased after the 2019–20 financial year.