Toggle left hand content menu
  • PAYG withholding

    Pay as you go (PAYG) withholding is a system that collects tax from the payments you make to employees and businesses so they can meet their tax liabilities.

    You'll have withholding obligations if any of the following apply:

    • you have employees
    • you have other workers, such as contractors, and you enter into voluntary agreements to withhold amounts from your payments to them
    • you make payments to businesses that don't quote their Australian business number (ABN).

    You must only employ legal workers – that is, Australian citizens, permanent residents and non-citizens with Australian visas that allow them to work – refer to Employing legal workers at Link

    End of attention

    If you make payments subject to withholding, you must:

    • register for PAYG withholding
    • withhold amounts from wages and other payments
    • lodge activity statements and make payments to us
    • provide payment summaries to employees and other payees
    • provide us with a PAYG withholding payment summary annual report.

    This guide doesn't explain your other tax-related obligations as an employer. For information on your:

    End of attention

    Registering for PAYG withholding

    There are several ways to register. You must apply for registration by the day on which you're first required to withhold an amount from a payment.

    Payroll tax

    All Australian states and territories have a payroll tax, which is calculated on wages paid or payable by employers.

    Payments you need to withhold from

    As an employer, you may need to withhold amounts from payments you make to your workers and other businesses, and send the withheld amount to us.

    Paying and reporting withheld amounts

    You need to pay withheld amounts to us, report the amounts on your activity statements and lodge an annual report.

    Payment summaries and annual reports

    You need to give each of your payees a payment summary specifying how much you paid them in the financial year and how much you withheld from the payments. You must also send us an annual report summarising all payments and amounts withheld for the year.

    When a worker leaves or retires

    When an employee or contractor stops working for you, your obligations may include making and reporting employment termination payments (ETP).

    No longer need to withhold

    If you cease to be an employer, you should cancel your registration for PAYG withholding.

  • Last modified: 27 Aug 2014QC 27057