• Apply for an ABN

    You may need to apply for a separate Australian Business Number (ABN) for business under administration or bankrupt estate.

    External administrators

    If the entity under external administration does not have an ABN, you will need to apply for a separate ABN. If the entity has an ABN, you may use this ABN after arranging for a separate branch number to be attached to the entity's ABN.

    Trustees

    You need to apply for a separate ABN (where the estate is entitled to an ABN) for each estate where you act as trustee.

    For more information applying for an ABN, refer to Business or company registrations.

    Work out the amount to withhold

    You are required to withhold amounts from payments you make to:

    • current or former employees of an entity under external administration
    • former employees of a bankrupt estate.

    To work out how much to withhold from payments you make to employees:

    If you don't have a copy of a Tax file number declaration for an employee, they must complete a new one. You will need to complete the 'payer' section and send the original of the completed declaration to us within 14 days. You must also keep a copy for your records.

    If a previous employee of the entity in administration or bankruptcy gives you a Withholding declaration to claim a tax offset, or to advise you of changes to their residency status and tax-free threshold, you are not required to send it to us. However, you must keep the completed Withholding declaration with your records for five years.

    Table 1: PAYG withholding and reporting for payments made by administrators and trustees

    Item

    Type of payment

    Applicable tax table or withholding rate

    Relevant payment summary

    1

    Current salary or wage payments made to employees, including payments for leave paid when the leave is taken, for the period after the date on which the administrator or trustee was appointed

     

    PAYG payment summary - individual non-business 3

    2

    Back payment of wages, including unpaid amounts of leave already taken (and including underpayment of wages over any period) that accrued before the date on which the administrator or trustee was appointed.

    Withhold at 34.5%

    PAYG payment summary - individual non-business 3

    3

    Back payments of wages, including unpaid amounts of leave already taken (and including underpayment of wages over any period) that accrued after the date on which the administrator or trustee was appointed

    Schedule 5 - Tax table for back payments, commissions, bonuses and similar payments

    PAYG payment summary - individual non-business 3

    4

    Unused annual leave and long service leave

    Withhold at 34.5%

    PAYG payment summary - individual non-business 3

    5

    A genuine redundancy payment or early retirement scheme payment which is within the tax-free limit, which includes a:

    • Payment for unused rostered days off
    • Gratuity or golden handshake
    • Taxable payments made after the death of an employee.
     

    Withhold Nil 1

     

    6

    Part of a genuine redundancy payment or an early retirement scheme payment that exceeds the tax-free limit

    Withhold at 34.5%

    PAYG payment summary - employment termination payment 2

    7

    Long service leave

    Withhold at 34.5%

    PAYG payment summary - individual non-business

    8

    Payment for a supply where no ABN is quoted. (This does not include dividend payments made to employees)

    Withhold at 49%

    PAYG payment summary - withholding where ABN not quoted

    1. The tax free amount of a genuine redundancy includes only those amounts which exceed the amount which the individual would have been paid upon a normal termination. It may or may not include amounts for payment in lieu of notice. Unused leave cannot be tax free. For the tax-free threshold for the year in which the payment is made, refer to the Tax table for employment termination payments (ETP).
    2. An ETP includes the part of a genuine redundancy payment or early retirement scheme payment that exceeds the tax-free threshold.
    3. A back payment which accrued within 12 months of the date of payment should be included in 'Gross Payments' on the payee's payment summary.

    A back payment which accrued more than 12 months before the date of payment, which is $1,200 or more, should be shown at 'Lump sum payments' label E. If the amount is less than $1,200 then include it in 'Gross payments' on the payee's payment summary.

    Variations

    An employee may apply to us for a reduction in the amount to be withheld from their payments. We will approve individual variations when the standard rate of withholding will be too high for that person's final tax liability. If we grant a variation we will send you a notice telling you what is required.

    There may also be situations where a group of employees with the same circumstances need to obtain a variation to the rate of withholding. In these cases, you may apply for a class variation for these employees.

    Suppliers quoting ABNs when dividends are paid

    If you make a payment representing a dividend to a recipient who is a creditor (other than an employee), you must withhold 49% from the payment if it relates to a supply and the recipient fails to quote their ABN. This also applies to any ongoing business transactions made by the trustee. For more information, refer to Statement by a supplier not quoting an ABN.

    Employees who had a debt with the employer and had an amount offset before payment

    Laws dealing with insolvency and bankruptcy require that certain debts are offset before the claim being made by the creditor. By law, the employee is permitted to claim only the net amount (if any) of wages that remain after taking into account amounts the employee owes the employer. You should calculate the amount to withhold based on this net amount, that is, after any offset has occurred.

    Payment summaries and annual reports

    Payment summaries

    Generally, you must provide:

    • each employee a payment summary by 14 July each year
    • an ETP payment summary to any employee to whom you have made an ETP within 14 days of making the payment.

    If you report your PAYG withholding information online, you can give employees their payment summaries printed on plain paper. However, the payment summaries must be in a format acceptable to us.

    For more information on payment summaries, refer to Payment summaries and annual reports.

    Choosing which payment summary to use

    The payment summary you use depends on the type of the payment being made. For more information about which payment summary to use, see Table 1: PAYG withholding and reporting for payments made by administrators and trustees.

    For help in completing payment summaries, refer to PAYG payment summaries: forms and guidelines

    Annual reports

    At the end of each financial year, you must send your PAYG withholding annual reports to us. These reports must include the following details:

    • all payments you have made to employees or businesses during the financial year
    • the amounts you withheld.

    Depending on the types of payments that you have made throughout the financial year, you may have to complete various types of annual reports.

    Table 2 shows the different types of annual reports, the types of payments you need to report and when you need to report.

    Table 2: Types of PAYG withholding annual reports

    What to report

    Annual report type

    When to lodge

    Information about payments you have made as wages, salaries or other work-related payments

    PAYG payment summary annual report

    By 14 August each year

    Information about payments you have made and amounts withheld from other businesses that did not quote their ABN to you

    PAYG withholding where ABN not quoted - annual report

    By 31 October each year

    Your PAYG withholding annual reports can be lodged:

    • online
    • on paper, using ATO printed forms.

    For more information, refer to Annual reporting

      Last modified: 13 Nov 2015QC 47359