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    Pay as you go withholding chapter

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    This chapter provides a general description of pay as you go withholding and instalment tax liabilities that are reported to the ATO by entities withholding amounts (income tax) from certain payments to other entities, or for payments towards their own income tax liabilities.

    Pay as you go withholding applies generally to payments made, or non-cash benefits provided, on or after 1 July 2000. Payments and transactions subject to withholding are referred to as 'withholding payments'. These payments include: salaries, wages, allowances, bonuses or commissions paid to an employee, payments to company directors, return to work payments, pension or annuity payments, Centrelink or similar payments, non-cash payments that are not captured in the fringe benefits tax system, mining payments, natural resource payments and many others.

    Pay as you go instalments are instalments during the income year which go towards a tax payer's expected tax liability. At the end of each income year when a taxpayer's income tax return is assessed, PAYG instalments for the year are credited against the taxpayer's assessment to determine whether the taxpayer owes more tax or is owed a refund. Most taxpayers pay PAYG instalments on a quarterly basis.

    Overview

    In 2009-10:

    • the ATO processed $120.0 billion of pay as you go withholding liabilities, an increase of 2.6% from 2008-09
    • large pay as you go withholders accounted for 69.0% of all withholding liabilities processed
    • the ATO processed $66.4 billion of pay as you go instalment liabilities, a decrease of 3.7% from 2008-09.
     
      Last modified: 18 Oct 2011QC 23907