4th June, 2021
Recently the ATO announced changes to Single Touch Payroll (STP) that may require your business to alter your reporting for “closely held payees”. Closely held payees include directors and shareholders of a business.
What is STP?
STP or Single Touch Payroll was introduced by the ATO in 2019. It requires employers to connect their STP compliant payroll software with the business’ ATO portal to file and report payroll information as soon as payroll has been processed for a period.
What has changed?
Previously, ATO allowed employers an exemption to filing STP for closely held payees of the company.
However, the ATO has confirmed this will no longer be the case. All businesses will now be required to commence regular reporting for payments to closely help payees using STP.
When do the changes take effect?
The ATO has confirmed that all employers will be required to use STP for payments from 1 July 2021.
Who does this affect?
This change only effects businesses who employ people (and that includes those of you who are employees of your own companies) who are currently not reporting STP for directors and shareholders. Starting 1 July 2021, you will have to process payroll using payroll software for these individuals at least once a quarter.
You will need to subscribe to a package that includes STP capabilities. We can help you connect your software with the ATO. From then onwards, you must process payroll for all employees.
Additionally, the payroll will also need to contain information regarding any director’s fees, allowances, bonuses, commissions, overtime, paid leave, and salary sacrifice that the directors and shareholders may have received.
Cost of the payroll software
You can purchase a Xero Payroll-Only Subscription that is STP compliant for $10 per month. If you are already on the Xero Starter Plan, you will be able to process payroll for 1 person and may not need to change your subscription. To learn more about the Xero pricing plans, click here. To find out which plan you are currently on go to “Settings” and then to “Subscription”.
We can help you set up STP for your company and process your payroll for you if you like. If you have any more questions regarding STP please do not hesitate to contact us.
Head to the ATO website for more information about the changes to STP
