Single Touch Payroll (STP) is a reporting regime initiated by the Australian Government to reduce employers' reporting burdens to government agencies. Earlier, the employers were required to report their payroll information to the ATO once a year.
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Staggered Implementation of the Single Touch Payroll Reporting
Under STP (started on July 1, 2018), employers (with 20 or more employees) are obligated to report their employees' payroll details to the ATO every time they are paid via STP-enabled software.
Payroll information includes:
- Pay-as-you-go withholding (PAYGW)
- Salaries and wages
Small employers (with less than 20 employees) have been required to report via STP since July 1, 2019. However, an exemption relieves small employers from being obligated to report payments made to closely held payees via STP expires on June 30, 2021.
Simply put, from July 1, 2021, small employers must report their closely held payees via STP. As an employer, you can choose to report this information each payday or quarterly. However, remember to report your arm's length employees on or before each payday.
What is a Closely Held Payee?
Individuals directly related to the entity and receiving payment are known as the closely held payee. For instance:
- Directors or the shareholders of the company.
- Beneficiaries of the trust.
- Family members of a family business.
Employers must continue to report details about all their employees (known as the arm's length employees).
What Payments Must be Reported?
All the payments that give rise to PAYGW obligation trigger an STP reporting obligation. For example, payment of wages and salary, director's fees, or other allowances.
Similarly, payments associated with trust distributions, dividends, or fully-expended reimbursements are not conditioned to STP reporting. Thus, it is optional to report the number of fringe perks via STP.
STP Reporting Options For Employers of Closely Held Payees
If you are a small business entrepreneur, you will have three alternatives to report payments to their closely held payees via STP. These are:
- Report actual payments on every payday.
- Report actual payments every quarter.
- Report a fair estimate quarterly.
For employers who select quarterly reporting, you will need to lodge your STP report till the due date of your quarterly business activity statement. Similarly, suppose you are opting for the monthly activity statement to report PAYGW or GST. In that case, you must know that the STP report will be due at the same time as the activity statement for the last month of each quarter — September, December, March, and June.
However, reporting the payments made to closely held payees every quarter does not change the due date for:
- Notifying PAYGW on the activity statement and paying by the expected due date.
- Making Superannuation Guarantee (SG) contributions for closely held payees (by the 28th day succeeding the end of the quarter).
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