PAYG withholding
PAYG withholding
This is available to download in Portable Document Format (PDF) format: PAYG withholding (NAT 8075, 700KB).
This guide will help you meet your pay as you go (PAYG) withholding obligations if you:
- are an employer
- operate a business that has other workers, such as contract workers, or
- make payments to other businesses that do not quote their Australian business number (ABN).
This guide does not cover withholding from:
- interest, dividends or royalty payments you make to a non-resident
- payments you make to foreign residents for
- entertainment or sports activities
- construction and related activities
- arranging casino gaming junkets
- interest, dividends or unit trust distributions you pay to an investor (including a non-resident) that did not provide or was deemed not to have quoted a tax file number (TFN)
- payments that trustees of closely held trusts make to beneficiaries, or
- departing Australia superannuation payments.
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If you need more information about withholding from these types of payments, refer to:
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Terms we use
When we say:
- contractor, we mean those workers who are self-employed and have a contract with you to provide services on their own account
- employee, we mean those workers you employ in your business. You generally have to withhold an amount from any payments you make to them
- labour hire worker, we mean those workers supplied by a labour hire firm
- payee, we mean an individual or business who receives payments
- payer, we mean an individual or business who makes payments to a payee.
Some technical terms in this guide may be new to you. These are shown in bold when first used, and are explained in the list of definitions.
Pay as you go (PAYG) withholding
If you have employees or pay employees of another business, you must withhold an amount from payments you make to them. If you operate your business as a company, you also need to withhold amounts from payments to company directors, for their services, this also includes payments to other workers such as contractors.
You must also withhold an amount from payments you make to other businesses if they don't quote their ABN to you on an invoice or other document if required.
You report and send all amounts you have withheld under PAYG withholding - this is called 'withholding'.
Under PAYG withholding:
- the individual or business making the payment is called the 'payer' and the individual or business receiving the payment is called the 'payee'.
- if you are an employer or you operate a business and you make payments subject to withholding you must
- register for PAYG withholding
- work out the status of your workers (if applicable)
- become familiar with the types of payments you need to withhold from
- work out the amount to withhold
- report and pay withheld amounts to us
- provide payment summaries and lodge an annual report after the end of each income year.
Other employer obligations
Super guarantee
Under super law, you must pay super contributions to the correct super fund by the cut-off dates for all your eligible employees. You may also have to offer a choice of super fund to your eligible employees including individual contractors.
You must pass on your employees' tax file numbers (TFN), provided in their Tax file number declaration (NAT 3092), to their super funds.
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If you need more information about your superannuation obligations:
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Fringe benefits
If you provide a fringe benefit to an employee or their associate, such as their family member, you may be liable for fringe benefits tax (FBT). Basically, a fringe benefit is a benefit provided to an employee (or their associate). Benefits include rights, privileges or services. For example, you provide a fringe benefit when you allow an employee to use a work car for private purposes or pay an employee's private health insurance costs.
Payroll tax
All Australian States and Territories have a payroll tax, which is calculated on wages paid or payable by employers. For payroll tax purposes wages includes salaries, allowances, director's fees, superannuation and the 'grossed-up' value of fringe benefits.
Employers are required to self-assess their liability on a monthly basis, with an annual adjustment reconciliation performed at the end of the financial year.
To see if you are liable for payroll tax you should check your local Revenue Office website to see if you need to register.
The Australian Taxation Office (ATO) and the State and Territory Revenue Offices exchange wage-related and other information to assist in the proper identification and accurate assessment of taxation liabilities.
For more information about payroll tax contact the Revenue Office where you employ:
PAYG withholding - what you need to do
If you have employees or other workers, or you make payments to other businesses that don't quote their ABN to you, you must:
- Register for PAYG withholding
- Work out the status of your workers (if applicable)
- Work out which payments to withhold from
- Work out the amount to withhold
- Report and pay withheld amounts
- Provide payment summaries and lodge an annual report
- Keep proper records
Register for PAYG withholding
You must register for PAYG withholding if you need to withhold an amount from a payment.
If you don't already have an Australian business number (ABN), you can register for PAYG withholding at www.abr.gov.au at the same time as you apply for an ABN, using the same form.
If you already have an ABN, and would like to add a PAYG withholding account, you can do so online at www.abr.gov.au using an Administrator AUSkey.
Alternatively if you have an ABN, you can register for PAYG withholding:
- online through the Business Portal at www.bp.ato.gov.au (you will need an AUSkey)
- by phoning 13 28 66 between 8.00am and 6.00pm, Monday to Friday
- by completing Add a new business account (NAT 2954) form (send your completed form to the address shown on the form)
- by contacting your registered tax or business activity statement (BAS) agent.
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If you are not required to have an ABN but need to withhold tax from a payment - for example, a supplier hasn't quoted their ABN or you employ people such as nannies or gardeners - you can register by completing the Application to register a PAYG withholding account (NAT 3377) form.
When this form is processed you will be issued with a withholding payer number (WPN).
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Cancelling your PAYG withholding registration
You can cancel your PAYG withholding registration at any time.
You can do this:
Work out the status of your workers (if applicable)
Your withholding obligations are different depending on whether your worker is an employee or a contractor.
Employees are those workers you employ in your business. You generally have to withhold amounts from payments you make to them and send the withheld amount to us.
If you have household employees such as nannies, cleaners or gardeners, you may have to withhold amounts from payments you make to them, even if you pay them under a private arrangement.
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If you need more information about your withholding obligations as an employer:
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Contractors are those workers who are self-employed and have a contract with you to provide services.
You generally don't withhold amounts from payments you make to contractors. However, if a contractor does not quote their ABN, you must withhold amounts from the payments you make to them - see When a business doesn't quote an ABN.
Your workers are not necessarily contractors because they quote an ABN alone. Whether a worker is an employee or a contractor depends on how you engage them and how the work is performed.
From 1 July 2012, businesses in the building and construction industry need to report to the ATO each year, the total payments they make to each contractor for building and construction services. These payments are reported to the ATO on the Taxable payments annual report - see Taxable payments reporting - building and construction industry.
Your contractors must meet their own tax obligations because you usually don't have to withhold amounts from payments you make to them. However, if you enter into a voluntary agreement with any of your individual contractors, you must withhold an amount from each payment you make to them, as detailed in the agreement. See Payments to contractors under a voluntary agreement.
Online decision tool
To help you work out whether your workers are employees or contractors, use our online employee/contractor decision tool.
There is also a specialised online decision tool you can use if your workers are in the building and construction industry.
These tools ask simple questions about your relationship with your workers and their working arrangements.
If you don't have internet access and cannot use the tool, see Table 1 Employee or contractor which will help you work out the status of your workers.
Table 1: Employee or contractor
Factors to consider
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Your worker is likely to be an employee if
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Your worker is likely to be a contractor if
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Control over work
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You, as the employer, have an implied right within industrial law to direct and control the work of the worker. The worker works in your business and you are free to manage the business as you see fit.
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You, as the payer, have a right to specify how the contracted services are to be performed. However, such control must be specified in the terms of the contract, otherwise the worker is free to exercise their discretion.
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Independence
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A worker performs work for you in accordance with an employment contract.
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The worker performs services as specified in a contract with you and provides additional services only by agreement.
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Payment
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The payments you make to the worker are based on any of the following:
- the period of time worked
- piece rates
- commission.
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The payments you make to the worker depend on the performance of the contracted services.
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Commercial risks
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The worker generally bears no legal risks in respect of the work they do. Since the worker works in your business, you are legally responsible for any work performed by the worker.
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The worker bears the legal risk in respect of the work. They have the potential to make a profit or loss, and must remedy any defective work at their own expense.
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Ability to delegate
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The worker performs the work personally and generally cannot subcontract the work to someone else.
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Unless otherwise specified in the contract, the worker can subcontract or delegate the work.
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Tools and equipment
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You, except when specifically agreed otherwise, usually provide tools and equipment.
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The worker generally provides their own tools and equipment.
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If you have labour hire workers
If you obtain workers from a labour hire firm, you pay the labour hire firm, not the workers. Therefore, you do not withhold amounts from payments you make to the labour hire firm, unless it fails to quote its ABN.
However, if you are a labour hire firm and you supply workers to clients under a labour hire arrangement, you must withhold amounts from payments you make to these workers.
For more information on the amounts to withhold from payments to individual workers under a labour hire arrangement, see Payments to labour hire workers.
Which payments to withhold from
The most common payments you need to withhold amounts from are payments you make to:
- your employees
- your directors
- businesses that do not quote their ABN to you.
Depending on your circumstances, you may also have to withhold amounts from payments you make to:
- contractors who have a voluntary agreement with you
- individuals under a labour hire arrangement
- employees on termination of their employment.
If you operate your business as a company or trust with a corporate trustee, it is likely you are either an employee or director of that business. If the company or corporate trustee pays you a wage or directors fees, it has the same responsibility to withhold amounts from these payments and send the withheld amounts to us.
If you operate your business as a sole trader or a partnership and you draw amounts from the business, this is not a wage and you do not have to withhold from these drawings. You make some provision for your income tax liability through PAYG instalments. However, if you have other employees, you must withhold amounts from payments you make to them under PAYG withholding.
Allowances
Allowances are separate payments you make to employees, company directors or labour hire contractors for:
- working conditions (for example, danger, dirt, height, shift or travelling time)
- qualifications or special duties (for example, trade, first aid certificate or safety officer)
- expenses they can't claim as a tax deduction (for example, normal travel between home and work)
- work-related expenses they may be able to claim as a tax deduction (for example, tools, compulsory uniform, and dry cleaning).
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If you need more information about withholding amounts from allowances paid to:
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The amount to withhold
Once you have worked out which payments you must withhold from, you must then work out the amount to withhold.
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If you don't withhold from payments or you don't withhold the correct amount, you may incur a penalty. If you find you have made a mistake, phone 13 28 66.
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Payments to employees
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To work out the amount to withhold from payments you make to employees, use the:
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Tax file number declarations
Each of your employees should complete a Tax file number declaration. You must:
- complete the payer section of the declaration
- send the original to us within 14 days
- keep a copy for your records.
An employee's Tax file number declaration gives you certain information that helps you work out the amount to withhold from payments you make to that employee. For example, whether they:
- are claiming the tax-free threshold
- an Australian resident for tax purposes
- have a Higher Education Loan Program (HELP) debt or a Financial Supplement debt.
If an employee does not quote their TFN, claim an exemption from quoting their TFN on the declaration or does not provide a declaration, you must:
- complete the payee section of the TFN declaration with all the information you know about your employee
- send the declaration to us
- withhold at the top marginal rate plus Medicare levy (or the top rate of tax if your employee is a non-resident for tax purposes) from all payments you make to that employee.
However, if the employee is under 18 years of age, you do not have to withhold amounts from payments you make to them if those payments are not more than:
- $350 - if you pay them weekly
- $700 - if you pay them fortnightly
- $1,517 - if you pay them monthly.
Where your employee has indicated on their declaration that they have applied for a tax file number, you don't have to withhold at the top marginal rate plus Medicare levy for the first 28 days - you withhold at the standard rate according to the applicable PAYG withholding tax table.
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Whenever an employee gives you a new declaration, it overrides any earlier declaration.
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Providing TFNs to super funds
When your employee completes a Tax file number declaration, you must pass their TFN onto their super fund or retirement savings account if you make contributions for them. You must do this when the next contribution is made for them or within 14 days of receiving the declaration and TFN, whichever is the earlier.
If you don't have to make super contributions for an employee, you only need to pass their TFN on to their super fund or retirement savings account when you start making contributions.
If you use a third party to manage your payroll or a clearing house to distribute super contributions to your employees' funds, make sure your contracts allow them to pass TFNs to funds or retirement savings accounts on your behalf, and that they do so. If they don't pass on the TFNs, you are liable for the penalties, not the payroll service provider or clearing house.
Withholding declarations
Your employees should give you a completed Withholding declaration if they want to:
- claim their entitlement to tax offsets by having a reduced amount withheld from payments made to them
- increase the amount you withhold
- advise you of changes to their
- tax-free threshold
- residency status
- accumulated HELP debt or accumulated Financial Supplement debt.
Withholding declarations tell you what adjustments to make to the standard rate of withholding as shown in the tax tables.
You don't need to send withholding declarations to us - keep the completed declarations with your employee records.
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Tax file number declarations, withholding declarations and PAYG withholding tax tables are available:
- from most newsagents
- by phoning 1300 720 092.
The PAYG withholding tax tables are also available at www.ato.gov.au/taxtables
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PAYG withholding tax tables
We publish PAYG withholding tax tables for:
- payments you make weekly (NAT 1005), fortnightly (NAT 1006) and monthly (NAT 1007) and
- particular types of payments; for example, employment termination payments, return to work payments, unused leave payments and back payments.
There is a full list of the tax tables at www.ato.gov.au/taxtables. Use the table that matches your circumstances.
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You can also use our online tax withheld calculator to work out how much to withhold from payments you make to your employees and other workers. To use the calculator, visit www.ato.gov.au and search for 'Tax withheld calculator'.
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Formulas for calculating tax withheld
We have formulas for calculating the correct amounts to withhold from payments.
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If you need more information about using formulas to calculate the correct amount to withhold from payments you make, refer to:
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Employees claiming tax offsets
If one of your employees indicates on their Tax file number declaration or Withholding declaration that they wish to receive their end-of-year entitlement to a tax offset by having less withheld from their regular payments throughout the year, use the 'Ready reckoner for tax offsets' on the relevant tax table to find out how much less to withhold.
Employees with HELP or Financial Supplement debts
If an employee has indicated that they have a HELP or Financial Supplement debt, use the HELP or Student Financial Supplement Scheme tax tables to work out how much extra to withhold for these debts. Add this to the amount withheld shown in the relevant column of the tables.
Variations
The rates of withholding provided in the tax tables are designed to approximate the amount of tax your employees are liable to pay at the end of the financial year. However, because each of your employee's circumstances are different, some of them may find the amount withheld using the tax tables is either less or more than the total amount of tax they are liable to pay. Your employees can apply to vary their rate of withholding upwards or downwards.
Upwards variation
An employee may ask you to increase the amount you withhold from payments you make to them; for example, to cover tax they will be liable to pay on investment income. If you agree to this, both you and your employee must complete the relevant sections of the Withholding declaration - upwards variation (NAT 5367). There are two sections to the form - an agreement and a declaration.
Once completed, you keep the declaration and return the agreement to your employee for their records.
Downwards variation
Your employee must obtain approval from us to reduce the amount you would normally withhold from payments you make. This usually happens only in special circumstances where your employee can show the amount of tax they are liable to pay on their total income in the year does not justify the standard withholding rate.
If your employee wants to vary their withholding amount downwards, they must complete a PAYG withholding variation application (NAT 2036) and send it to us either online through an e-variation or by mail. If we approve a downwards variation, we will send an approval letter to the employee and a variation notice to you, outlining the new rate or reduced amount to be withheld. Both the notice and the letter will clearly specify the expiry date of the notice.
Example: Downwards variation
Peter is an employee who also owns a negatively geared rental property. As Peter can claim deductions against his rental property, the amount his employer withholds from his wages results in Peter receiving a large income tax refund at the end of the income year.
Instead of receiving the large refund at the end of the income year, Peter can apply to the ATO to reduce the amount his employer must withhold from his wages. If Peter's application is approved, the amount withheld throughout the year will be less than the amount his employer would ordinarily have to withhold using the tax tables.
Employing foreign residents
If your employee answered 'no' to the question 'Are you an Australian resident for taxation purposes?' on their Tax file number declaration, you must use foreign resident tax rates. To work out the amount to withhold from payments you make to foreign resident employees, refer to the foreign resident section within the applicable tax table.
Some foreign residents are exempt from paying tax in Australia. If you are satisfied that your employee's income is exempt from tax in Australia, you don't have to withhold amounts from their payments. The employee can apply for a private ruling from us on whether their income is exempt.
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If you need more information about withholding from amounts you pay to foreign residents:
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Paying employees that work overseas
If you have any employees that are working in a foreign country, you need to be aware of your pay as you go (PAYG) withholding obligations.
Foreign earnings that do not meet any of the conditions to be exempt are assessable income and subject to PAYG withholding requirements. These earnings should be included in your employee's income tax return as assessable income. They may be entitled to a foreign income tax offset for amounts of foreign tax paid.
Some payments for foreign services that relate to certain development projects, and charitable or government activities are exempt from tax.
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If you need more information on exempt income:
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If you have any employees working in a foreign country and their payments do not meet any of the conditions to be exempt, you should:
You must include exempt foreign employment income when calculating your employee's repayment income to work out their HELP compulsory repayment.
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If you need more information about withholding from amounts you pay to employees working overseas:
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Personal services income
Personal services income is income that is mainly a reward for personal efforts or skills.
If you operate a company, partnership or trust that does not meet the tests of a personal services business, some income your workers generate may be personal services income. This income is attributed to the individuals who earned it but does not include GST and permitted deductions. The attributable part of that income also does not include amounts paid to the individual as salary or wages if paid within 14 days of the end of the PAYG payment period.
You may have an additional PAYG withholding obligation for the amount you attribute to the individuals.
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For more information about personal services income, refer to:
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Payments to contractors under a voluntary agreement
If you enter into a voluntary agreement with an individual contract worker who has an ABN, you must withhold amounts from payments you make to them, as detailed in the agreement. This helps the worker pay their income tax.
You cannot enter into a voluntary agreement if a worker's payment is covered by another specific PAYG withholding category; for example, if the worker is being paid as an employee or under a labour hire arrangement.
A voluntary agreement can cover a specific task or apply to successive arrangements between you and the worker. Either you or the worker can end a voluntary agreement at any time by notifying the other in writing.
To make a voluntary agreement with a worker, you can use the form a Voluntary agreement for PAYG withholding (NAT 2772).
You don't have to use this form, but any voluntary agreement you make must be in writing and include all the information specified on the form. There is a copy of the form on the next page showing what information you need to include.
The amount you must withhold under a voluntary agreement is either:
- the worker's PAYG instalment rate notified to them by us
- a flat rate of 20%, as shown in Table 2 Worker's instalment rate.
Table 2: Worker's instalment rate
If the worker's instalment rate is
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Use
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More than 20%
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The worker's instalment rate
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Less than 20%
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20% rate (unless you both agree to use the instalment rate)
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Not known when agreement is made
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20% rate
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To work out how much to withhold, multiply the worker's invoiced amount by the withholding rate specified in the voluntary agreement.
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Both you and the worker must keep a copy of the voluntary agreement while it is in force and for five years after the last payment is made under the agreement. You don't have to send a copy to us.
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Payments to labour hire workers
If you are a labour hire firm providing individual workers (as employees or contractors) under a labour hire arrangement, your workers are taxed at the same rate as employees. You work out how much to withhold using the weekly tax table, fortnightly tax table or monthly withholding table, together with information provided on your workers' tax file number and withholding declarations.
Where you provide labour hire workers who are operating as a company, partnership or trust, you do not have to withhold amounts from payments you make to them, unless they don't provide you with their ABN.
Employment termination payments
An employment termination payment (ETP) is a lump sum payment you make under either of the following circumstances:
- to an employee when their employment is terminated
- to an employee's estate because their employment has been terminated due to death.
ETPs can comprise of two different components:
- Tax free component
- Taxable component.
You only withhold from the taxable component.
Generally you must make a lump sum payment within 12 months of your employee's employment termination for the payment to qualify as an ETP. Payments made outside 12 months should be treated as ordinary income and an amount must be withheld in accordance with the regular pay as you go (PAYG) withholding tax tables.
Examples of ETPs include:
- payments in lieu of notice
- payments for unused sick leave
- a payment for unused rostered days off
- 'golden handshake' payments, whether paid under contract, industrial award obligation or the employer's desire to recognise past service
- compensation for loss of job
- compensation for wrongful dismissal, as long as it is paid within 12 months of the actual termination of employment
- the amount of any redundancy payments you make that exceed the tax-free limit
- payments because of the employee's permanent disability, other than a compensation payment for personal injury
- the amount of any payments you make under an early retirement scheme that exceed the tax-free limit
- lump sum payments you pay on the death of an employee.
- Examples of what are not ETPs include:
- genuine redundancy and early retirement scheme payments up to certain tax free limits
- a payment from a superannuation fund.
Before making an ETP, you must work out:
- any tax-free components
- any taxable components
- whether an earlier ETP has been paid for the same termination.
When a business doesn't quote an ABN
If a business supplies you with goods or services, that business should quote their ABN. If they don't, generally you must withhold at the top marginal rate plus Medicare levy from the payment you make to them and send the withheld amount to us.
You do not have to withhold from payments if any of the following apply:
- the total payment you make to the supplier is $75 or less, excluding goods and services tax (GST)
- the supplier is an individual under 18 years of age and your payments to that person are $350 or less each week
- the goods or services are supplied through an agent who has quoted their ABN on an invoice or some other document relating to the supply
- the goods or services supplied are wholly input taxed under GST
- the entire payment you make is exempt income for the supplier
- the supplier is not entitled to an ABN as they are not carrying on an enterprise in Australia.
Also, you should not withhold from the payment you make if the supplier states in writing that the supply is either of the following:
- made in the course or furtherance of an activity done as a private recreational pursuit or hobby
- wholly of a private or domestic nature.
If you are aware that any one of the above conditions applies, you do not have to withhold, even where they have not quoted an ABN. However, you must have sufficient records to show the reason for not withholding.
If you are unsure, ask the supplier to give you a written statement that states the supply of goods or services is excluded for one of these reasons. The supplier may use the Statement by a supplier (NAT 3346), or create their own statement containing the same information. You must keep their statement for five years.
If you have reason to believe the statement is false or misleading, you must withhold at the top marginal rate plus Medicare levy from the total payment.
If a supplier has applied for an ABN, you can offer to hold payment until the supplier has obtained and quoted their ABN. This is a matter for you and your supplier to work out. However, you must not make full payment to the supplier on the understanding that an ABN will be quoted later. If you do, you may be subject to penalties for the amount you did not withhold.
If you withhold from the payment, you must complete a payment summary and give it to the supplier at the same time you pay them the net amount or as soon as practicable thereafter.
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If you need more information, refer to Statement by a supplier (NAT 3346). This includes a guide for businesses called 'Should your suppliers quote their ABN?'
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Be sure to include your ABN on your business stationery, especially on your invoices, as other businesses will need this information so they don't have to withhold from payments for goods and services you supply to them.
If you are registered for GST, other businesses will also need your ABN on your tax invoices to claim GST credits for GST they pay in the price of goods and services you supply to them. Remember, invoices you provide are not tax invoices for GST purposes unless they include your ABN.
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Reporting and paying withheld amounts
You report and pay amounts you withhold to us by completing an activity statement. We will send you an activity statement and you report your PAYG withholding obligations at the applicable W label - see the example below.
If you have not withheld any amount for a reporting period, you don't have to report amounts at labels W2 to W5. However, you must still report any other obligations you have, sign and date your activity statement, and return it to us by the due date printed in the top right-hand corner.
Example:
You paid $10,680 in wages during September and withheld $2,971 from the wage payments. During September, you also withheld $164 from a supplier who didn't quote an ABN on their invoice.
On your September activity statement, you report:
- $10,680 (gross amount you paid) at W1
- $2,971 (amount you withheld) at W2
- $164 (amount you withheld because the supplier didn't quote their ABN) at W4.
You add the amounts shown at W2 and W4 (but not the amount shown at W1) and write the total at W5. You then transfer the total at W5 to label 4 in the summary section of your activity statement.
You will need to report an amount at W3 if you withheld amounts from payments such as interest, dividends or royalties paid to a non-resident.
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Ensure the amounts that have been withheld are reported at the correct label.
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When to pay amounts you withhold to us
The due date for paying amounts you withhold to us depends on whether you are a small, medium or large withholder.
Small withholders
You are a small withholder if you withhold $25,000 or less a year. You must pay the amount you withhold to us quarterly. We will send you an activity statement each quarter that shows when your withholding payment is due.
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If you are a small withholder, you can choose to pay the amounts you withhold to us monthly if you wish. To arrange this, phone us on 13 28 66. You can still pay other tax amounts, such as GST and fringe benefits tax, quarterly if you wish.
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Medium withholders
You are a medium withholder if you withhold $25,001 to $1 million a year. You must generally pay any amount you withhold to us monthly. We will send you an activity statement each month that shows when your withholding payment is due.
Large withholders
You are a large withholder if you have withheld amounts totalling more than $1 million in a previous income year or are part of a company group that has withheld more than $1 million in a previous income year. If you are a large withholder, you must generally pay the amounts you withhold to us electronically twice weekly.
How to pay the amounts you withhold to us
You can pay the amounts you withhold to us using any of the following methods.
BPAY®
You can make a payment directly from your cheque or savings account to us using your financial institution's telephone or internet banking service.
Details you need
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Biller code:
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75556
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Reference:
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Your EFT code
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Your payment must reach us on or before its due date. Check your financial institution's processing deadlines to avoid making a late payment.
Credit card
Credit card payments can be made online via the Government Easy Pay website or by phone, a card payment fee applies.
Details you need
To make a credit card payment you will need:
- a current Visa, MasterCard or American Express card
- your ATO electronic funds transfer code or your payment reference number EFT code or PRN.
Direct credit
You can transfer your payment to us online from your cheque or savings account.
Details you need
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Bank:
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Reserve Bank of Australia
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BSB:
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093 003
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Account number:
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316 385
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Account name:
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ATO direct credit account
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Reference:
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Your EFT code
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Your payment must reach us on or before its due date. Check your financial institution's processing deadlines to avoid making a late payment.
Direct debit
You can have your payment automatically deducted from your cheque or savings account.
Details you need
For a verbal direct debit payment arrangement after the due date, phone us on 13 11 42.
For all other direct debit requests, complete the Direct debit request (NAT 2284) form and return it to us.
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To obtain a direct debit form:
Allow at least seven (7) working days for your direct debit to be activated to ensure your payment reaches us on or before its due date.
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Allow at least seven (7) working days for your direct debit to be activated to ensure your payment reaches us on or before its due date.
Mail
You can mail your cheque or money order to us.
Cheques and money orders should be for amounts in Australian dollars and made payable to 'Deputy Commissioner of Taxation'. Cheques should be crossed 'Not Negotiable' and must not be post dated.
You should also include your payment slip or a note that states your:
- full name
- address and telephone number
- account identifier, such as your Tax file number, Australian business number (ABN) or client identification number
- payment type, such as BAS payment, income tax or HELP.
Mail your payment and payment slip or note to:
WA, SA, NT, TAS or VIC residents
Australian Taxation Office
Locked Bag 1936
ALBURY NSW 1936
NSW, ACT or QLD residents
Australian Taxation Office
Locked Bag 1793
PENRITH NSW 1793
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Do not use pins, staples, paper clips or adhesive tape. Do not send cash.
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Also, remember to allow sufficient time for your payment to reach us on or before its due date.
Australia Post
Make a payment by cash, EFTPOS or cheque
If you have a pre-printed payment slip with a barcode, you can pay in person at any Australia Post outlet.
A $3,000 limit applies to cash payments. EFTPOS payments are subject to daily withdrawal limits.
Cheques and money orders should be for amounts in Australian dollars and payable to 'Deputy Commissioner of Taxation'. Cheques should be crossed 'Not Negotiable' and must not be post dated.
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If you need more information about:
- BPAY, credit card, direct credit, mail or BPAY, post office payments or mail payments, phone us on 1800 815 886 between 8.00am and 6.00pm, Monday to Friday, Australian Eastern Standard Time, or email payment@ato.gov.au
- direct debits or to obtain a direct debit form, phone us on 1800 802 308 between 8.00am and 6.00pm, Monday to Friday, or email eft-information@ato.gov.au
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Payment summaries and annual reports
Providing payment summaries to your workers
Each year you are required to provide your workers with a payment summary.
Payment summaries show the total payments you made and the amount you withheld for each worker during the financial year ending 30 June.
You should provide a payment summary for payments made to employees and other payees where withholding is required, even if the withheld amount is nil.
Generally, you must give the following:
- each of your workers a payment summary by 14 July each year
- an ETP payment summary to any employee to whom you have made an employment termination payment within 14 days of making the payment.
You will need to provide a copy of the payment summary to each worker and keep a copy for your records. If you report your PAYG withholding information electronically, you can give your workers their payment summaries printed on plain paper; however, the payment summaries must be in a format acceptable to us.
If you report your PAYG withholding information using paper forms rather than electronically, you will need to send the original of the form to us with a PAYG payment summary statement (NAT 3447). We will send you payment summaries and a personalised payment summary statement around May each year.
If you need extra payment summaries you can order them by phoning our automated ordering service on 13 72 26 at any time. You will need your ABN or withholding payer number (WPN) to order. If we send you more payment summaries than you need, you can keep them for future use.
Part-year payment summaries
Workers may request a part-year payment summary. The worker's request must be made in writing, no later than 21 days before the end of the financial year.
You must provide the worker with copies of the payment summary within 14 days of their request, unless the worker is an individual with a reportable fringe benefits tax amount. In this case, a part-year summary may not be issued.
Part-year payment summaries provide details of withholding payments made from either of the following:
- 1 July of that financial year to the date of issue of the payment summary
- the date of issue of any previous part-year payment summary to the date of issue of the current one.
The end of financial year payment summary you provide to a worker who has previously been issued with a part-year payment summary will only include details relevant to the period from the date of issue of the last part-year payment summary, to 30 June.
Workers and other payees no longer have to include copies of all payment summaries issued to them with their tax return.
Providing payment summaries where no ABN has been quoted
Where another business doesn't quote an ABN to you, you must give them a payment summary showing details of the payment.
You can use our form PAYG payment summary - withholding where ABN not quoted (NAT 3283) or prepare your own, as long as you include all the necessary details. You need to provide this payment summary at the same time you make the payment or as soon as practicable thereafter.
Choosing which payment summary to use
Remember, you may have to complete various types of payment summaries, depending on the types of payments you have made throughout the financial year. Table 3 Types of payment summaries shows the different types of payment summaries, who they are for and when to provide them.
Table 3: Types of payment summaries
Type of payment summary
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Who this payment summary is for
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When to give this payment summary
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PAYG payment summary - individual non-business (NAT 0046)
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Employees, company directors and office holders to whom you pay salary and wages, pension payments, compensation, allowances or other payments.
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By 14 July
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PAYG payment summary - business and personal services income (NAT 72545)
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- Workers, other than employees, who have a voluntary agreement with you to withhold amounts from payments you make to them.
- Workers you employed under a labour hire arrangement.
- Certain other workers, such as performing artists, to whom you paid specified payments.
- Individuals from whose personal services income you have to withhold amounts from.
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By 14 July
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PAYG payment summary - foreign employment (NAT 73297)
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Employees who have amounts withheld from:
- foreign employment income
- income earned for work in the Joint Petroleum Development Area (JPDA).
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By 14 July
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PAYG payment summary - employment termination payment (NAT 70868)
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Employees to whom you have made an employee termination payment.
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Within 14 days of making the payment.
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PAYG payment summary - withholding where ABN not quoted (NAT 3283)
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Businesses that don't quote their ABN to you.
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At the same time you pay them the net amount or as soon as practicable thereafter.
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PAYG payment summary - superannuation lump sum (NAT 70947)
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Employees to whom you have paid a super lump sum payment.
You can only pay a super lump sum if you are a retirement savings account (RSA) provider or you operate:
- a super fund
- an approved deposit fund
- a life insurance company and you pay an annuity purchased with any of the following
- an eligible termination payment rolled over prior to 1 July 2007
- a roll-over super benefit paid after June 2007.
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Within 14 days of making the payment.
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PAYG payment summary - superannuation income stream (NAT 70987)
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Payees to whom you pay super income streams such as pensions or annuities.
You can only pay a super income stream if you operate one of the following:
- a super fund
- an approved deposit fund
- a life insurance company and you pay an annuity purchased with a rolled over employment termination payment.
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By 14 July
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You can provide some of these payment summaries electronically, as long as you send the relevant PAYG withholding annual report to us electronically.
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There are various other payment summaries for other types of payments you may make to your workers.
If you need more information about the different payment summaries that are available, visit www.ato.gov.au/paymentsummaries
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At the end of each financial year, you must lodge your PAYG withholding annual reports to us. These reports must include the following details:
- all payments you have made to employees, workers or businesses during the financial year
- the amounts you withheld.
Depending on the types of payments that you have made throughout the financial year, you may have to complete various types of annual reports. Table 4 Types of annual reports shows the different types of annual reports, the types of payments you need to report and when you need to report.
Table 4: Types of annual reports
There are three methods of providing your PAYG withholding annual reports to us. They are:
- online
- on electronic storage media (that you mail to us)
- on paper, using ATO approved forms (that you also mail to us).
Reporting online is quicker and easier because you:
- can submit your PAYG withholding annual reports to us via the internet using our electronic commerce interface (ECI). ECI is free to use. All you need is an ABN, compatible software, such as payroll software, and an AUSkey to ensure the security and privacy of the information you lodge
- can provide your employees, workers or businesses with an electronic payment summary
- can give your employees, workers or businesses their payment summaries printed on plain paper
- don't have to complete a PAYG payment summary statement (NAT 3447) or send copies of paper payment summaries to us.
Reporting using electronic storage media involves preparing and sending your PAYG withholding annual reports to us, in the mail, using magnetic media for example, CD-ROMs, DVDs or flash drives.
You can report your PAYG withholding information electronically, as long as you use payroll software that meets our specifications. You can purchase commercial payroll software that meets our specifications or you can develop your own in-house software.
Standard Business Reporting (SBR) is an Australian Government initiative, allowing secure online lodgment directly from your financial, accounting or payroll software.
We accept lodgments via SBR-enabled software for the following forms:
- activity statement
- Fringe benefits tax (FBT) return
- PAYG payment summaries including
- Employment termination payment summary data record
- Superannuation income stream payment summary data record
- Superannuation lump sum payment summary data record
- Individual non-business
- Business and personal services income
- Tax file number (TFN) declaration
Software providers are progressively SBR-enabling software and forms, with additional forms to be available throughout the year. Before purchasing or upgrading your software, make sure the software includes the forms you require.
To find out whether your software is SBR-enabled you can view the SBR product register at www.sbr.gov.au or talk to your software provider. You will also see how Standard Business Reporting can simplify your reporting.
If you want to provide your employees and other workers with an electronic payment summary, refer to Providing electronic payment summaries to payees (NAT 9210).
Reporting using paper forms
If you report using paper forms, send your completed PAYG payment summary statement (NAT 3447) to us for the financial year ending 30 June, together with the ATO original copies of all completed payment summaries.
Both the PAYG payment summary statement and the payment summaries must be reported on ATO forms. Remember to keep a copy of the statement and payment summaries for your records.
Your PAYG payment summary statement must include the totals of all payments made and amounts withheld for all your workers, including:
- employees
- contractors under a voluntary agreement
- labour hire workers under a labour hire arrangement
- employees working in a foreign country (overseas).
Remember to include amounts for any employment termination payments and, personal services income you have attributed. You must send this report to us by 14 August each year.
If you have withheld from businesses that did not quote their ABN, you need to complete a PAYG withholding where ABN not quoted - annual report (NAT 3448).You must send this report to us by 31 October each year. You don't have to send us copies of payment summaries you give to suppliers, but you must keep copies for your records.
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To order both the PAYG payment summary statement (NAT 3447) and the PAYG withholding where ABN not quoted - annual report (NAT 3448):
- visit www.ato.gov.au/onlineordering
- phone our automated ordering service on 13 72 26. You will need your ABN or withholding payer number (WPN) to use this service.
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Pre-filling - making it easier for your workers to prepare tax returns.
You can make it easier for your workers to lodge their tax returns. Simply lodge your PAYG withholding payment summary annual report early. As soon as we have processed your annual report, we will make the payment summary information available in the following forms:
- pre-filled into the correct labels in e-tax - the free service offered by us that allows individuals to complete and lodge their income tax returns
- reports for tax agents to help them complete their client's tax returns.
For more information about pre-filling, visit www.ato.gov.au/helpyouremployees
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Keeping proper records
Under tax law, you must keep all records that explain your PAYG withholding transactions. Records must be in English or in a form that can be converted into English. Make sure you keep all your records for five years.
If your records are not in a written form (for example, in an electronic form on a computer system), they must be in a form that is readily accessible and easily converted into English.
Regardless of whether you use a manual or an electronic record keeping system, you may want to store and keep paper records electronically.
We accept the imaging of business paper records onto an electronic storage medium, as long as the electronic copies:
- are a true and clear reproduction of the original paper records
- can be retrieved and read by tax officers at any time.
You don't have to keep original paper records once they have been imaged onto an electronic storage medium.
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You must keep your business records for at least five years.
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PAYG withholding records you must keep
The PAYG withholding records you must keep include:
- wages records, including payment records
- voluntary agreements
- employment declarations (for employees working for you before 1 July 2000), tax file number declarations and withholding declarations
- copies of payment summaries and payment summary statements, or electronic annual reports, if applicable
- employment termination payment records
- records of personal services income you have attributed
- statements by a supplier where no ABN was quoted
- records of amounts you withheld where no ABN was quoted
- annual reports of PAYG withholding where no ABN was quoted.
PAYG withholding forms and publications
To order our forms or publications, visit www.ato.gov.au/onlineordering or phone 1300 720 092.
Declarations
PAYG withholding tax tables
Regular payments
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Foreign resident tax tables are no longer produced. Information on withholding for foreign residents is contained in the weekly tax table or fortnightly tax table.
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Guidelines for completing PAYG payment summaries
Annual reports - paper
Guides and fact sheets
Definitions
Activity statement (Business activity statement)
You use an activity statement to report your PAYG withheld amounts, along with other business tax entitlements and obligations, including GST, PAYG instalments and fringe benefits tax.
Australian business number (ABN)
Your Australian business number (ABN) is your identifier for certain dealings with us and other government departments and agencies.
Employment termination payment (previously called 'eligible termination payment')
An employment termination payment is a lump sum payment made to a person as a consequence of the termination of their employment.
Higher Education Loan Program (HELP)
The Higher Education Loan Program assists eligible students to pay their student contribution or tuition fees under any of these schemes - HECS-HELP, FEE-HELP, OS HELP or VET FEE-HELP.
A person is required to start repaying their HELP debt, including any debts incurred under the previous Higher Education Contribution Scheme (HECS), when their repayment income is above the minimum repayment threshold for compulsory repayment.
Large withholder
Large withholders have total annual withholding of more than $1 million. They generally have to pay withheld amounts electronically twice weekly.
Medium withholder
Medium withholders have total annual withholding of $25,001 to $1 million. They generally have to pay withheld amounts monthly. If you are a medium withholder, we will send you an activity statement each month that shows when your withholding payment is due.
PAYG withholding
PAYG withholding is the system whereby payers withhold amounts from payments to payees and send the withheld amounts to us.
Payment summary
A payment summary shows the total payments made and the amount withheld for each worker during the financial year ending 30 June, or the amount withheld from a business that did not quote its ABN.
Personal services business
An individual or personal services entity receiving personal services income is considered to be a personal services business if certain conditions are met.
Personal services entity
A personal services entity is a company, partnership or trusts whose income includes the personal services income of one or more individuals.
Personal services income
Personal services income is income that is mainly a reward for personal efforts or skills.
Small withholder
Small withholders have total annual withholding of $25,000 or less. They have to pay withheld amounts quarterly. If you are a small withholder, we will send you an activity statement each quarter that shows when your withholding payment is due.
Student Financial Supplement Scheme (SFSS)
The SFSS was a voluntary loan scheme to help tertiary students cover their expenses while studying. In the fifth year of the loan being taken out, the ATO took responsibility for collecting the outstanding balance, which became an accumulated Financial Supplement debt.
The scheme closed on 31 December 2003 and no new loans are being issued. Existing Financial Supplement debts will continue to be collected through the tax system.
A person is required to start repaying their SFSS debt when their repayment income is above the minimum repayment threshold for compulsory repayment.
Voluntary agreement
A voluntary agreement is an agreement between a business and a contractor for the business to withhold amounts it makes from payments to the worker and send these amounts to us. The worker doesn't have to pay PAYG instalments for that income. The worker must have an ABN.
Withholding payer number (WPN)
To register for PAYG withholding an ABN or WPN is required. If your entity is not entitled to an ABN - that is, you are not carrying on an enterprise, you should complete an Application to register a PAYG withholding account (NAT 3377)
Online services
To access helpful online products and services visit:
- www.ato.gov.au for easy access to tax information for small business
- www.ato.gov.au/onlineservices to find out about our range of online services, including the Business Portal
- www.business.gov.au for easy access to a range of business information, services and transactions with government. There are links to our applications to register for an ABN and GST, or to apply for a tax file number.
- www.sbr.gov.au to find out how Standard Business Reporting -enabled software can simplify reporting to government.
You can obtain more information by phoning us on:
- 13 28 66 (general business or FBT enquiries) for information about most small business tax matters, including PAYG withholding, GST, ABN, PAYG instalments, business deductions, lodging and paying activity statements, activity statement accounts, wine equalisation tax, luxury car tax, fringe benefits tax, fuel tax credits and matters for non-profit organisations
- 13 10 20 (super enquiries) for information about superannuation guarantee, choice of super fund and the super co-contribution
- 13 28 61 (personal tax enquiries) for information about individual income tax and general personal tax enquiries
- 1300 720 092 to order copies of our publications.
If you do not speak English well and need help from the ATO, phone the Translating and Interpreting Service on 13 14 50.
If you are deaf, or have a hearing or speech impairment phone the ATO through the National Relay Service (NRS) on the numbers listed below:
- TTY users, phone 13 36 77 and ask for the ATO number you need
- Speak and Listen (speech-to-speech relay) users, phone 1300 555 727 and ask for the ATO number you need
- Internet relay users, connect to the NRS on www.relayservice.com.au and ask for the ATO number you need.
Our free tax support services provide access to experienced tax officers who can answer your questions and help you stay on top of your tax obligations.
We run small business seminars and workshops on a range of topics, including GST, PAYG withholding, activity statements and record keeping. To register for a seminar, visit www.ato.gov.au/seminars or for more information including available workshops, phone 1300 661 104 between 8.00am and 6.00pm, Monday to Friday.
If you are a new or existing business and would like one of our tax officers to meet with you, you can organise an on-site visit by using our online booking form at www.ato.gov.au/assistancevisit or by phoning 13 28 66 between 8.00am and 6.00pm, Monday to Friday. Visits are confidential and conducted at your place of business or preferred location.
The Business Portal is a secure website that you can use to:
- view, prepare, lodge and revise activity statements
- view your statement of account and payment options
- request refunds and transfer funds between your accounts
- update your details, and
- communicate with us through a secure mailbox.
You may be eligible for a two week deferral if you lodge and pay your activity statement online, subject to terms and conditions. Find out more at www.ato.gov.au/2weekoffer
To access the Business Portal, you will need:
- an ABN
- internet access
- minimum computer requirements
- an AUSkey to identify yourself.
Your small business tax calendar is an easy-to-use, free computer tool that will help you plan and manage your tax obligations and give you timely reminders. It automatically builds a 12-month schedule tailored to your business lodgment and payment needs.
This evaluation tool helps you understand what records you need to keep and evaluate whether your record-keeping practices are adequate. It provides:
- a list of records tailored specifically for your business
- a report on how well your business is keeping its records
- suggested improvements where appropriate.
You can use it for an existing business or if you are thinking about starting a business.
The decision tool is designed to help you (as a payer) understand whether your individual workers are employees or contractors in order to comply with your Commonwealth tax and superannuation obligations.
We have a range of online calculators to assist you with your business including:
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To access these calculators, visit www.ato.gov.au/business and select 'Find a rate of calculator' then 'List all rates & calculators'.
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E-tax is a free and secure service provided by us which allows individuals to prepare and lodge their tax return online. It has built-in checks and calculators to make sure they get it right and offers a fast processing of their return, usually within 14 days or less.
E-tax users who choose to use the pre-filling service in e-tax can download some of their personal information directly into their return. This includes details about their income and expenses such as employment and investment income, government payments, deductions, medical expenses and more.
This register is a reliable source of information about commercially available tax-related software. The software listed on the register meets our requirements and will help you meet your tax obligations.
A free superannuation clearing house service is being offered to small business with less than 20 employees.
The Small Business Superannuation Clearing House lets employers pay their super contributions to a single location in one simple electronic transaction.
Order our publications online
To order our publications online (including forms) quickly and easily, search using its name or NAT number (a unique identifier number assigned to ATO publications).
Order our publications by phone
24 hour self help services
- Phone our Business tax self help service on 13 72 26, Fast Key Code 4. You will need to provide your Australian business number (ABN) or tax file number (TFN) to use this service.
- Phone our publications distribution service on 1300 720 092. You will need to provide your ABN to use this service.
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You will need to know the name of the publication you want to order to use this service.
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Last Modified: Tuesday, 21 August 2012
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