Closely held employees

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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.

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 process 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

Our method below might not suit your business needs, so you should speak to your accounting advisor about what works best for you. Find an MYOB Partner near you.

1. Set up a closely held employee

You can set up closely held employees much the same as any other employee (Cards File > Cards List > Employee tab > New).

There's some mandatory information you'll need to enter to be able to report their payroll information via STP, including:

First name
Surname or family name
Address (including suburb/town/locality, state/territory, and postcode)
Tax file number

Also set the following in the employee's card:

On the Payroll Details tab > Personal Details, set their Employment Basis to Individual, Employment Category to Permanent, and their Employment Status to Full Time, Part Time or Casual (as applicable).
On the Payroll Details tab > Wages, set their Pay Frequency to Quarterly.
On the Payment Details tab, set their Payment Method to Cash.

If you need a refresher on setting up an employee or you've never done it before, learn all about adding employees.

Super payments

As you'll need to pay superannuation for closely held employees, make sure you've set up Pay Super and added your closely held employees to Pay Super payments.

2. Set up STP

If you haven't already, you'll need to set up STP. You'll then be able to report your closely held employees' payroll information to the ATO each quarter.

To get started, go to the Payroll menu and choose Single Touch Payroll reporting.

For all the details, see Setting up Single Touch Payroll reporting.

3. Process interim payments

Because you'll be reporting payroll information to the ATO once per quarter, you'll likely need to record interim payments to reflect the more regular payments you make to closely held employees.

Each business is different, so check with an accounting advisor about the best way track, record and reconcile these interim payments.

One suggestion would be:

Create a payroll clearing account to keep track of interim payments made to closely held employees.
Set the payroll clearing account as the linked account for payroll cash payments (Setup > Linked Accounts > Payroll Accounts > Bank Account for Cash Payments).
Record interim payment as spend money transactions, allocated to the payroll clearing account. The balance of the payroll clearing account should be the amount you need to report to the ATO each quarter.

Need some help? For specific advice for your business, and to get help setting up and processing payroll for closely held employees, speak with an MYOB Partner.

4. Process and report a quarterly pay run

When you process a pay run for your closely help employees, you'll enter their pay amounts for the quarter (including earnings and deductions), then report it to the ATO.

If you've processed payroll before, this'll be easy. Here's a quick rundown—for more details see Processing your payroll.

Go to the Payroll command centre and click Process Payroll.
Select the option to Process all employees paid and choose Quarterly as the frequency.
Choose the pay dates and click Next. All the employees you've set up with a quarterly pay cycle will be listed. Deselect any employees you don't want to include in this pay run.
Enter the pay amounts for each closely held employee:
1. Click the blue zoom arrow to open the employee's pay details.
2. Enter the hours and/or amounts for each applicable payroll category.
3. Click OK when you're done.
Click Record then click Record again at the confirmation message.
When prompted to send payroll information to the ATO, enter the name of the authorised sender and click Send.
Finish the pay run as normal. Need a refresher?