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  • PAYG withholding gap

    In this document, you'll find information about estimating the pay as you go (PAYG) withholding gap. This gap forms a part of our overall tax performance program.

    Under the Taxation Administration Act 1953, employers have an obligation to collect tax from payments made to employees and remit that tax to the Australian Taxation Office (ATO). Employers must register with us under the PAYG withholding scheme to do this.

    PAYG withholding provides an effective way for most people to meet their annual income tax obligations. The withholding system also ensures we collect a more stable, secure source of revenue throughout the year. This revenue supports a range of community services.

    Key facts on PAYG withholding for the 2017–18 financial year include:

    • we had around 848,000 employers in Australia
    • employers paid $191 billion PAYG withholding to the ATO
    • employers paid about 97% of PAYG withholding voluntarily, without intervention from us.

    For 2017–18 we estimate a net PAYG withholding gap of 1.8% or $3.5 billion. In other words, we estimate that around 98% of the total theoretical PAYG withholding tax payable was paid in 2017–18.

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      Last modified: 19 Oct 2020QC 57198