4 Posts

Single Touch Payroll – Small Employers Closely Held (Related)

Posted on July 30, 2021 by Ashley Dawson

What is Single Touch Payroll?

Single Touch Payroll (STP), is an Australian Government initiative to reduce employers’ reporting burdens to government agencies. This allows employers to report employees’ payroll information to the ATO each time a payment is processed. Payroll Information includes:

  • Salary & Wages
  • Pay as you go (PAYG) withholding
  • Employer Superannuation Contributions

Single touch payroll was rolled out on the 1st July 2018 for business’ with 20 or more employees and 1 July 2019 for business’ with 19 or fewer employees.

As these entities have now been reporting for over a full financial year, it is now time for closely held payees to get STP ready.

As of 1 July 2021 Closely Held (Related) Payees will need to be reported through STP. This also includes a number of other concessional reporting entities such as:

  • Agriculture, fishing and forestry industry
  • Not-for-profit clubs and associates
  • Season and intermittent employers
  • Inbound assignees

Who are closely held payees?

Closely held payee is an individual who directly related to the entity from which they receive payments. Examples are:

  • Family members working in a family business 
  • Beneficiaries of a trust
  • Director or shareholders of a company

Ways to report your closely held payees

From 1 July 2021, you are able to report payments of wages to closely held employees through STP in the following ways:

  • Report actual payments on or before the date of payment, as with all other employees
  • Report actual payments quarterly. I.e report payroll information when your activity statement is due for that quarter
  • Report a reasonable estimate quarterly. Report amounts equal or greater than a percentage of gross payments and tax withheld from latest year, across each quarter

Reporting Payments Quarterly

Small employers can choose to report their closely held payees on a quarterly basis. 

If this method is chosen, your quarterly STP report is due on or before the date of your quarterly business activity statement.

This does not change the due dates for any PAYG withholding or super guarantee charges for closely held employees.

Reporting a reasonable estimate

Closely held payees drawing money from their business can elect to make a reasonable estimate of gross wages each quarter based on their prior year gross wage.

The ATO will remit any failure to withhold penalty employers may incur if:

  • Year to date reporting amount and tax withheld for closely held payees is equal to or greater than 25% of payee’s total gross payments and tax withheld from previously payment summary annual report. They can then complete a final adjustment in the 4th STP quarter to bring the year-to-date reporting in line with their total wages.
  • Report and pay the PAYG withheld to the ATO on time.

An example of this is demonstrated below:

Grant Pty Ltd has chosen to start reporting their closely held payees using the reasonable estimate method.

Sean, the closely held employee received a gross wage of $80,000 in the 2021 financial year.

Grant Pty Ltd reports $20,000 each quarter for the first three quarters of the 2021 financial year. This is 25% of Sean’s 2021 $80,000  gross wage.

Grant Pty Ltd realises in the 4th STP event Sean will receive $90,000 of gross wages for the 2021 financial year, not the $80,000 as estimated. Therefore, Grant Pty Ltd will report $30,000 of wages in the 4th STP quarter of the 2022 financial year to bring his gross wages in line. 

If Grant Pty Ltd chooses to use the reasonable estimate method for the 2023 financial year, the reasonable estimate for the first 3 quarters will be $22,500 and make a wage adjustment accordingly in the 4th STP quarter.

However, if payments made equal more than 25% of payees gross payments for last financial year and the employer did not report this through STP  this omission may cause:

  • Unpaid super and therefore super guarantee charge liability for the relevant quarters, requiring SGC statements to be lodged,
  • Not be able to deduct the payment of super as it will be deemed late,
  • Be liability for penalties and interest.

Finalisation declaration due date for closely held payee

Small employers with only closely held payees (shareholders of a company or beneficiaries of a trust) have up until the due date of the closely held payee’s individual income tax return to make a finalisation declaration for a closely held payee.

For arm’s length employees the due date is the 14th July.

How to lodge your STP reports

To lodge your STP reports for closely held employees you will need STP enabled software, the same as for arm’s length employees. This is the same for reporting actual payments, reporting actual quarterly payments and reasonable quarterly estimates. If you are reporting wages using the quarterly or reasonable estimate method, you will need to ensure the closely held employee’s payroll settings are set up on a quarterly cycle. Then when it is time to process the quarterly pay run, your STP enable software will recognise it is time to report their wages. The gross wages and PAYG will then need to be reported on your quarterly BAS.

Depending on the STP software, your lodged STP report may include both arm’s length employees and closely held payees the reports may be prepared and lodged separately.

Suitable no/low cost STP software’s

The below STP enabled software for small employers is a sample of the available packages.

All of our staff at GeersSullivan are trained in the use of STP software and are Certified Xero Payroll Experts. If you are unsure of anything regarding setting up, reporting or finalizing your payroll affairs please reach out as soon as possible so we can help you manage this critical component of your reporting to the ATO.

Software Spotlight – MYOB Exo Business

Posted on June 15, 2016 by Ashley Dawson

Business growth often comes with the realisation that your current systems have become increasingly disparate or complex.   Is your old system (or systems) able to give you visibility over your business as it stands today and into the future?

Here are a few questions to consider:

  • Do you or your team miss reporting deadlines?
  • Do you find yourself spending more and more time combing through worksheets and less time actually doing your work?
  • Do you ever feel like you’re not 100% sure what’s going on across the business?
  • Do you find yourself micro-managing staff?
  • Is reporting a painful process for you or your team – is it time consuming, rarely 100% accurate, do you suffer from data-overload, or by the time it is done, is the data out of date?
  • Does your system crash due to number of users?
  • Do you have different contact information in different programs / systems?

If you can relate to any of these, it’s likely that data isn’t flowing around your company as freely as it could and this may be preventing your business from reaching its potential in today’s highly competitive market.

As your business grows, so too does your data. Reporting isn’t about making all the information available all the time. Instead, it should be a simple and intuitive experience that helps you and your team engage and find answers to their questions quickly and easily.

MYOB EXO Business is a fully integrated financial and business management system specifically for medium sized and larger businesses. It’s modular design supports Finance, Customer relationship management (CRM), Job and Project Costing, Accountant’s Assistant, Point of Sale, Fixed Assets, Serviceable Units, API, OnTheGo Mobile Application and Intercompany.  These are packaged to ensure the final solution for your company is a perfect fit.    EXO Business will enable you to manage your information in an efficient and organised manner, gain complete visibility across your organisation and assist you to make quick educated decisions essential to the success of your business.

Horizon Business Systems, West Australia’s MYOB EXO Business premium Platinum Partner, has the experience to implement and customise a solution to your individual business needs.   Horizon’s depth of product and management process knowledge will ensure the success of your system investment.

Ultimately, Horizon Business Systems can help give you and your team access to the information they need to do their jobs properly – and that’s good for the whole business!

Should you wish to discuss whether MYOB Exo Business can benefit your business, please contact the team at GeersSullivan, or should you wish to contact Horizon Business Systems directly please go to www.horizonbiz.com.au or Stephen Archer on (08) 9328 1678.

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