Changes to Closely Held Payees from 1st July 2021
The current concession is that Closely Held Payees are exempt from STP reporting until the 30th of June 2021. Closely Held Payees are currently only identified by the ATO but there is very little compliance activity on reporting.
The Rules Have Changed
As a result of the enhanced reporting and digitisation of all payroll processes it is no longer acceptable for Closely Held Payees (mum and dad, family members, directors, shareholders) to have a wages amount calculated once a year only at the time of preparing their personal tax returns, noting that employers do not have to finalise the payroll of a Closely Held Payee until their tax return preparation by the Tax Agent.
For large employers (20 or more employees):
- Closely Held Payees must have payments subject to withholding reported on or before payday.
- The “Finalisation” of Closely Held Payees payroll can be deferred until their individual tax return is being prepared, accordingly their final payroll may be adjusted at that time.
For all other employers:
- Closely Held Payees may have the reporting of their payments:
- On or before payment, or
- Once per quarter based on actual payments, or
- Once per quarter based on a pro rata calculation each quarter
- The “Finalisation” of closely held payee’s payroll can be deferred until their individual tax return is being prepared, accordingly their final payroll may be adjusted at that time.
For access to the full resource on all the processes and procedures regarding this change in obligations please see full ICB Resource – Wages, STP and Closely Held Payees (member only)