Single Touch Payroll: Reporting obligations for closely held payees and other exempt businesses in FY22

STP reporting for End of Financial Year

As we approach the end of the financial year, businesses and payroll providers 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. This means that as an outsourced payroll provider, accountant or bookkeeper, you’ll need to ensure you’re correctly processing payroll for clients according to STP.

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, so you’ll need to ensure this is on your radar as a payroll provider. 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

Micro businesses (with 4 or fewer employees) had the option to report quarterly via a registered BAS agent for this financial year. These businesses will also be required to report monthly as of July 1 unless they (or you) apply for an 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, this can also be done 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, payroll providers who lodge on behalf of 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 employer clients, please refer to this article.

WPN holders

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

If you’re processing payroll for a business that is not yet reporting via STP for the 2020/21 Financial Year, EOFY reporting will need to be done 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

Looking to find out more about how KeyPay has prepared for STP Phase 2? Take a look at our support articles.

Disclaimer: The information in this article is current as at 1 June 2022, and has been prepared by Webscale Pty Ltd (ABN 70-154-693-955) and its related bodies corporate (KeyPay). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. KeyPay does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and to seek professional advice before making any decisions or relying on the information in this article.

Carly Harvey

Support at KeyPay AU


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