Single Touch Payroll: Reporting obligations for closely held payees and other exempt businesses in FY22
As we approach the end of the financial year, businesses and payroll professionals are focused on wrapping up payroll (and crossing their fingers that the figures match!).
With the introduction of Single Touch Payroll (STP) on 1 July 2018, finalising payroll for year end is now a much easier and more streamlined process. Those businesses currently exempt from STP will now need to begin preparing for STP reporting on July 1 2021.
STP - the July 1 2021 changes
By July 1 2021 some exempt businesses will have to move over to STP, and some previously exempt micro businesses will have to change their frequency of reporting.
Closely held employees
Small businesses (with 19 or fewer employees) with closely held employees were previously exempt from STP reporting for those employees. These businesses will now have to begin reporting STP data to the ATO from July 1. A closely held employee is classed as a family member, Director or Shareholder of a company. Read more on managing closely held payees with STP from July 1 2021.
Micro businesses (with 4 or fewer employees) had the option to report quarterly via a registered BAS agent for this financial year. These employers will also be required to report monthly as of July 1 unless they apply for exemption under exceptional circumstances.
Exceptional circumstances for micro businesses include:
- Being a micro employer of seasonal or intermittent workers
- No or unreliable internet connection
- Operational deferral – which would allow you an extra three days to lodge.
- A deferral via your tax agent
What are the registered agents STP responsibilities for their micro employer clients?
Registered agents will need to lodge their client's STP report once per quarter. The due date for the STP lodgement is the same date as the client's activity statement due date. If activity statements are lodged monthly, the quarterly STP lodgement is due on the same day as the last monthly activity statement for that particular quarter.
If a micro employer chooses to report STP monthly instead of quarterly, they can either do so themselves, or via a registered agent. The registered agent must lodge the STP event on or before the 21st day of the following month. This is the same due date as monthly activity statements.
How will micro employers report via STP in FY22?
When lodging events for the applicable period, micro employers must ensure that:
- Only pay runs with a date paid within the relevant quarter (or month, if reporting on a monthly basis) are the pay runs lodged;
- Pay runs are lodged in ascending chronological order (the oldest pay runs first and the most recent last).
- Instructions on lodging a pay event in KeyPay can be found here.
For further details around obligations for micro employers please refer to this article.
The ATO recently announced that the exemption for WPN holders has now been extended for another year. The new mandated date is July 1 2022. WPN holders who want to report via STP will have to do so via a registered agent.
Year end reporting 2020/21 for exempt businesses
Businesses not yet reporting via STP for the 2020/21 Financial Year will do their EOFY reporting via payment summaries. For more information on how this is managed in KeyPay, see our payment summaries EOFY reporting support article.
Year end reporting 2020/21 for businesses already reporting via STP
Year end reporting via Single Touch Payroll is a much more streamlined process. For details on how this is managed easily in KeyPay for EOFY 20/21, see our STP EOFY guide.
Get ready for Single Touch Payroll
It’s time to allow STP to streamline reporting for those exempt businesses.
There are many benefits of STP which include but are not limited to:
- Elimination of double handling and errors due to the ATO pre-filling PAYG withholding payroll fields W1 and W2 in the BAS.
- Eliminating the need to submit an annual payment summary to the ATO, allowing for a more streamlined and accurate year end reporting process. Payroll data is communicated to the ATO after each pay event, saving time at EOFY.
- Better, more streamlined record keeping
- The employee has more control and visibility having access to a personal MyGov account
For more detailed explanations and further advice please take a moment to read our Single Touch Payroll (STP) Guide which breaks down how easily STP can be set up and managed in KeyPay.