Mandatory ATO Requirements Single Touch Payroll & Small Business Owners
Single touch payroll started in 2018 for businesses with 20 employees or more and in 2019 for 19 employees or less. It is mandatory for tax reporting. However, until 30 June 2021, reporting amounts to closely held payees has been exempt through STP. This exemption no longer applies.
The ATO has mandated that Single Touch Payroll STP include reporting amounts paid to Closely Held Payees from 1 July 2021. Read the ATO article for more details.
When do you have to report on Closely Held Payees via Single Touch Payroll?
If you're a small business, you can report on these payments on or before each pay or report this information quarterly.
Who are closely held payees?
They are usually the relatives or owners of the business; see below:
- Family members of a family business
- Directors or shareholders of a company
- Beneficiaries of a trust.
Does this apply to businesses with 20 employees or more?
No. Different arrangements apply.
How can your report on Closely Held Payees through STP?
You can choose what suits your business structure.
OPTION A – Actual payments On or before the pay date
OPTION B – Actual payments quarterly
OPTION C – Estimate payments quarterly
Self Assessment Questions:
- Do you keep track of all transactions in and out of your business accounts to your closely held payees? Yes. Then Choose OPTION A. If no, please continue.
- Do you wait until the end of the tax year for the accountant to report on payments made to closely held payees? Yes. Then choose OPTION C. If no, then perhaps talk to your accountant about OPTION B.
How can Chartfords Accountants help with Single Touch Payroll?
We manage small business finances via Xero, which is a Cloud-based Accounting Platform. Xero enables us to view all transactions. Reconcile your expenses, incomings and outgoings. Manage your employees' payroll reporting and BAS reporting every month or quarterly to help you stay on top of your ATO requirements so you can have peace of mind with your accounts and continue working in your business.