If your business is covered under the definition of a small employer, then you must read this article. Until now small employers were not required to report the amounts paid to closely held payees through Single Touch Payroll (STP). But this exemption is no more valid with effect from 1st July! This means that any amount paid by employers to closely held payees shall be reported through STP 1st July onwards. Let us discuss this in detail now.
To begin with, let us see what is meant by closely held payees and how do you report them through STP.
Meaning of closely held payees and their STP reporting
A person is said to be a closely held payee of a paying entity if the person is a relative of such entity making payments. For instance, if amounts are paid to family members of a family–owned business, then such amounts need to be reported through STP.
Thus, all amounts you as an employer pay to closely held payees on and after 1st July shall be reportable.
How do you do STP reporting for closely held payees?
Now that we know what closely held payees mean, let us have a look at how we can report amounts paid to them via STP.
Reporting on or before the payment date
You can choose to report the amounts paid to closely held payees on or before each pay date.
Reporting on a quarterly basis
Instead of reporting on each pay date, you can choose to report the information quarterly. Every quarter you need to report the information at the time when your BAS (Business Activity Statement) is due.
Reporting on estimation basis
You can also report the amounts quarterly based on estimation. The estimation should be more than or equal to a percentage based on gross payments and tax withheld last year.
You can choose any one of the above three reporting methods as per your business circumstances.
Is there still any exemption from quarterly STP reporting?
Micro employers are still exempted from the requirement of quarterly STP reporting only when they meet some eligibility criteria. To avail this exemption, the employer must be facing exceptional circumstances.
If the business experiences exceptional circumstances as suggested by the ATO, then such employers can consider applying for quarterly exemption. Such exemption would allow the micro employers to carry out the reporting quarterly for two years with the help of a registered tax or BAS agent.
In short, not all small employers are now eligible for exemption from quarterly STP reporting for amounts paid to closely-held payees. Only those businesses that meet certain listed exceptional circumstances are now eligible for exemption. If your business is also covered under exemption criteria, then you can consider applying for the exemption through the deferral tool. For this, you can also take help from registered tax or BAS agents.