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  • PAYG withholding gap

    This information is 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 us. 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, which supports a range of community services.

    Key facts on PAYG withholding for the 2018–19 financial year include:

    • we had around 856,000 employers in Australia
    • employers paid $204 billion PAYG withholding to us
    • employers paid about 97% of PAYG withholding voluntarily, without intervention from us.

    For 2018–19 we estimate a net PAYG withholding gap of 1.6% or $3.4 billion. In other words, we estimate that around 98% of the total theoretical PAYG withholding payable was paid in 2018–19.

    Note: the Fringe Benefits Tax (FBT) system might be considered a component of the broader PAYGW / income tax on salary and wages regime. When PAYGW and FBT are viewed together, the integrated gap was approximately 2.1% in 2018-19. That is, employers are voluntarily paying nearly 98% of the taxes related to their employee's remuneration.

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      Last modified: 19 Oct 2021QC 57198