Guide for employers

Pay as you go (PAYG) withholding

When an employee (or contractor who has been operating under a voluntary agreement) stops working for you, you have a number of PAYG withholding obligations.

Employee

When an employee ceases employment with you, you must:

make any final PAYG withholding payments on the employee's behalf - refer to the Tax withheld calculator if there is no employment termination component to the final payment, or Tax tables
send a payment summary to the employee by 14 July, or earlier if requested
retain the employee's TFN declaration (NAT 3092) for the current and next financial year
include the details of any final payments made to the employee in your PAYG payment summary statement
keep the necessary PAYG withholding records.

If the employee is eligible for an employment termination payment (ETP), you will have additional withholding obligations. For more information, refer to Employment termination payments (ETP).

Contractor

When a contractor ceases their contract with you, you must make any final PAYG withholding payments and keep the necessary PAYG withholding records

for contractors under a voluntary agreement, and
for contractors who have not quoted their ABN.

For contractors under a voluntary agreement, you will also need to:

forward a business and personal services income payment summary to the contractor by 14 July, or earlier if requested
include the details of any final payments made to them in your PAYG payment summary statement.

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Last Modified: Monday, 8 October 2012