I only pay family through payroll — is my STP finalisation due 30 September?

The company has two people in it and both are family: a director, and the director's spouse. The money that comes out of the business each month gets called wages once the bookkeeping catches up. In July the payroll software asked whether to finalise the year — and either the button got pressed on the first weekend of July, or it never got pressed at all, because nobody was at home waiting on an income statement.

Then a reminder email turns up with 30 September on it. Whether that date has anything to do with you turns on something quite specific — and it is not how small the business is.

What makes a payee 'closely held'

A closely held payee is an individual directly related to the entity paying them. The ATO's examples are family members of a family business, directors or shareholders of a company, and beneficiaries of a trust. Everyone else on the payroll is an arm's length employee.

Being closely held does not by itself pull a payment into Single Touch Payroll. The ATO's wording is that the need to report depends on how the payment is classified, not on who receives it. Salary or wages are in scope, and so are directors' fees. Distributions to a beneficiary of a trust are not, nor are dividends paid to a shareholder, nor an amount that is a loan from the business. The same person can receive several of these in a year and only some of them go through STP.

This is where the bookkeeping does real work. The ATO's own example is a company whose directors draw money through the year, each drawing promptly recorded as a loan and the balance cleared at the end of each month by paying a directors' fee. The drawings are not reported; the monthly directors' fee is. If everything you pay is out of scope you have nothing to report at all — but your records have to demonstrate that.

There are three finalisation dates, and only one of them is 30 September

If you have 20 or more employees, closely held payees are reported each payday alongside everyone else, and the finalisation due date for those closely held payees is 30 September each year.

If you are a small employer — 19 or fewer payees — and you only have closely held payees, the due date for end-of-year STP finalisation is the payee's own tax return due date. Not 14 July, and not 30 September. Where that payee lodges through a registered tax agent, it is the agent's lodgment program date that applies to them, which we have written about separately.

If you are a small employer with both closely held payees and arm's length employees, the two run on separate clocks. The finalisation declaration for the closely held payees is due by 30 September. You must still make a finalisation declaration for the arm's length employees by 14 July.

So 30 September is a hard date in two of those three situations and irrelevant in the third. Working out which one you are in turns on headcount and mix, not on turnover.

The quarterly options, and the flag that makes them work

Small employers with closely held payees can report in any of three ways: actual payments on or before the date of payment, actual payments quarterly, or a reasonable estimate quarterly. A quarterly STP report is due on or before the due date for your quarterly activity statement — for the July to September quarter, 28 October, and later if a concession or deferral pushes the statement itself out.

You do not have to tell the ATO which of the three methods you picked. There is one thing you do have to tell it. Under STP Phase 2, an individual has to be reported using the Closely Held Payee income type if you are using one of the quarterly options, or if you intend to finalise later than 14 July. Without that flag, what the ATO is looking at is an ordinary employee whose income statement has gone past the general due date unfinalised.

If the estimate turns out to be too low

Where your circumstances are not materially different from the year you most recently finalised, the ATO generally accepts a year-to-date figure of 25% of that year's total at Quarter 1, 50% at Quarter 2, 75% at Quarter 3 and 100% at Quarter 4. Where they have materially changed, the estimate is meant to move with them, and reporting lower than your last finalised year may prompt the ATO to ask why.

If the estimates were too low you revise the Quarter 4 activity statement, pay the additional PAYG withholding and possibly general interest charge, and review the super — contributions below the minimum super guarantee rate mean a super guarantee charge statement. The relief attached to this method carries three conditions: the ATO says it will not impose false or misleading statement or failure to withhold penalties for an estimate being too low or too high, as long as you followed its guidance, your estimates were reasonable in your circumstances, and you paid what you owed each quarter.

Two things commonly got wrong

The first is reading 30 September as a payment date. It is not one. It is the date on which the year's reported figures are declared final. Whichever reporting option you use, the money side does not move: PAYG withholding still goes on the activity statement and is paid by its due date, and super guarantee contributions for closely held payees are still due by the quarterly super due date, which is not the same day as the activity statement.

The second is forgetting that somebody is waiting at the other end. From 1 July an employee's information shows as 'not tax ready' until the finalisation declaration goes in, at which point it changes to 'tax ready'. The ATO tells employees to wait for that before lodging; lodging on unfinalised figures means acknowledging that you may finalise with different amounts and that they may need to amend and pay additional tax. In a family business the payee and the person pressing the button are often at the same kitchen table, which is exactly why the date gets treated as a suggestion.

The general work here is short. Count the payees and look at the mix, because that decides which of the three dates is yours. Check that anyone closely held carries the Closely Held Payee income type if you are on a quarterly option or finalising after 14 July. If you report quarterly, the July to September report is due with the activity statement on 28 October. And if you did press finalise in July, confirm the declaration covered everyone you paid and reported through the year, including anyone who worked only part of it.

This is general information current as at 11 September 2026 and not advice about your business. Working out which finalisation date applies, getting the income type right, and keeping the withholding and super side lined up with it is ordinary payroll work — it is what our BAS, IAS and payroll service does.