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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 (PAYG(W)) 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.

    PAYG(W) 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, the provision of certain non-cash benefits, mining payments, natural resource payments and many others.

    Pay as you go instalments (PAYG(I)) 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 tax return has been lodged and tax payable assessed, PAYG(I) for the year are credited against the taxpayer's assessment to determine whether the taxpayer owes additional tax or is entitled to a refund. Most taxpayers pay their instalments on a quarterly basis.

    Overview

    In 2010-11:

    • the ATO processed $129.5 billion of pay as you go withholding liabilities, an increase of 7.9% from 2009-10
    • large pay as you go withholders accounted for 68.5% of all withholding liabilities processed
    • the ATO processed $71.1 billion of pay as you go instalment liabilities, an increase of 7.0% from 2009-10.
     
      Last modified: 01 May 2012QC 25367