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Closely held employees

A closely held employee is someone who's directly related to the business, company or trust that pays them, such as:

  • family members of a family business

  • directors or shareholders of a company

  • beneficiaries of a trust.

The ATO refers to these as closely held payees, but as we'll explain below you'll set them up in MYOB as employees—so that's how we'll refer to them.

Single Touch Payroll (STP) reporting

The ATO require payments to closely held employees to be reported via STP at least quarterly. So if you're paying a closely held employee on a regular frequency, such as weekly, fortnightly, monthly or quarterly, you can process their payments through payroll like any other employee. This will also take care of the tax and superannuation obligations which are required on those pays. Learn all about setting up an employee and processing your payroll.

However, if a closely held employee isn't paid on a set frequency, you'll still need to report their pays to the ATO via STP at least quarterly.

Here is the recommended way to handle these types of quarterly payments.

Seek expert advice

Quarterly reporting might not suit your business needs, so you should speak to your accounting advisor about what works best for you.

At the end of the year

Your accountant will work with you at the end of the payroll year to ensure your books are balanced. For example, you might need to allocate any remaining balance in the payroll clearing account which hasn't been processed through payroll.