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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 pay as you go instalment (PAYG(I)) liabilities reported to the ATO.

    PAYG(W) applies generally to payments made, or non-cash benefits provided, on or after 1 July 2000. The most common payments and transactions subject to withholding are: payments to employees such as salaries, wages, or allowances; payments to company directors; payments to businesses that do not quote their ABN; and payments to contractors who have a voluntary withholding agreement.

    PAYG(I) are instalments paid by certain taxpayers during the income year which go towards the taxpayer's expected tax liability. At the end of each income year when a taxpayer's tax return has been lodged and tax payable is assessed, PAYG(I) for the year is 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.

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    Overview

    For the 2011-12 financial year:

    • pay as you go withholding liabilities totalled $141.2 billion, an increase of 8.3% from 2010-11
    • large pay as you go withholders accounted for 70.1% of all withholding liabilities

    pay as you go instalment liabilities totalled $80.6 billion, an increase of 13.5% from 2010-11.

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      Last modified: 03 Mar 2014QC 33846