Single Touch Payroll changes from 1 July

What small business needs to know about changes to STP this EOFY

Many employers will already be using Single Touch Payroll (STP) however, with the ATO rolling out the initiative in stages, there are still some that have been offered exemptions. That is, until now.

From 1 July 2021, most small businesses will need to be STP compliant. This includes small employers with closely held payees, as well as some micro businesses and seasonal employers.

Although EOFY is just around the corner, there’s still time to get prepared. The changes could mean that you have to opt into STP for the first time, or start filing employees who aren’t already being reported with the ATO.

What does closely held mean?

According to the ATO, a closely held payee (otherwise known as a closely held employee) is an individual directly related to the entity from which they receive payments. For example, this would include relatives in a family business, or beneficiaries of a trust fund.

Depending on your working arrangements, some businesses process irregular or infrequent pay runs for family members on their books. That’s why, up until 1 July 2021, small employers (with 19 or fewer payees) have been exempt from STP reporting of closely held payees.

What’s changing with how my business remunerates closely held payees?

By the end of FY21, employers with fewer than 19 employees will have to report closely held salaries or wages through STP. Every family member on your books counts and there are three payment reporting requirements to be aware of:

  1. Report and process payroll through STP on or before payday
  2. Report the accurate payroll amount with STP once per quarter, on or before the BAS due date
  3. Report a reasonable estimate with STP once per quarter, on or before the BAS due date

Out of the three reporting options, there’s no one-size-fits-all approach – it comes down to what works best for your business’ needs.

Are there any other changes I need to know about?

As well as small employers with closely held payees, some micro and seasonal employers will now have to report on or before the payment date – not quarterly – unless they receive a concession. This includes businesses with four or fewer employees, including those in the following industries:

  • Agriculture, fishing and forestry
  • Not-for-profit clubs and associations
  • Seasonal and intermittent employers

Micro businesses in each category may still be eligible for STP reporting concessions, such as quarterly or exceptional circumstances exemptions.

TIP: Ask us about how you can apply for a concession

The STP changes for this EOFY are one of the final hurdles in transitioning most Australian small businesses to a more streamlined reporting system. Although the initiative is still evolving, with the support of the Allan Hall team, you’ll be able to tackle any new changes head on.

With EOFY fast approaching, it’s best to reach out to us sooner rather than later to talk through the reporting option that’s right for you, and any steps you need to be aware of before 1 July. Contact Allan Hall’s Tax & Accounting specialists in Brookvale on 02 9981 2300 for specific advice about your circumstances.