Show download pdf controls
  • Changing a withholding cycle

    The pay as you go (PAYG) withholding cycle determines how often you need to report and pay the withholding amounts to us.

    Where an employer's annual withholding amount is:

    • $25,000 or less (small withholder status) – you are required to notify and pay quarterly
    • more than $25,000 and up to $1 million (medium withholder status) – you are required to notify and pay monthly
    • more than $1 million (large withholder status) – you are required to pay within six to eight days of a withholding event taking place, such as when staff are paid.

    There are three ways your withholding cycle can be changed.

    Find out about:

    Requesting a change

    You can request a change to your withholding cycle if your annual withholding amounts change:

    • To upgrade your withholding cycle (pay more frequently), phone us so we can discuss your circumstances with you.
    • To downgrade your withholding cycle (pay less frequently), you will need to apply in writing, giving detailed reasons to support the request, and send it to
      • Australian Taxation Office
        PO Box 3373
        PENRITH NSW 2740
      • When you write to us we will consider your request and send you a notice advising the outcome of the request.
      • If your request is not approved, you can object to this decision.

    Cycle change as a result of compliance activity

    We may change your withholding cycle as a result of an audit or other compliance activity.

    We consider the following matters when making a determination:

    • the total amounts you are likely to withhold in the next 12 months
    • the extent, if any, to which you make or receive withholding payments that were previously made or received by another entity
    • any failure to comply with obligations under the withholding rules
    • any other matter considered relevant.

    If we make a determination to upgrade your withholding cycle, we will issue a written notice advising you of the change and the date it will come into effect.

    If you do not agree, you can object to the determination to upgrade your withholding cycle.

    ATO annual review

    We will review your withholding payments each financial year to check if your withholding cycle needs to be changed.

    We will write to you to upgrade your withholding cycle if your annual withholding payments have increased. Your new withholding cycle will be determined by your new withholder status (medium or large).

    We will allow time for you to change to the new payment cycle before your first payment is due for the new financial year.

    You can't object to this notice. However, if you disagree with our decision, you can ask to stay on your existing cycle. This is if you estimate your future year's withholding amount to be within your withholding status threshold.

    You need to send your request in writing to us within 14 days of receiving our letter to:

    • Australian Taxation Office
      PO Box 1129
      PENRITH NSW 2740

    See also:

    Request to remain on a lower withholding cycle

    We may approve a request to remain on a lower withholding cycle if you:

    • are a non-profit organisation with limited resources, such as a small parish within a religious institution
    • are involved in seasonal work, for example, fishing or farming activities that only occur for part of each year
    • will cease trading during the next financial year
    • only make withholding payments for part of the year, and for the majority of the year you have nil withholding amounts to notify and pay
    • have fluctuations in income due to uncertainty of contracts in certain industries
    • need to make a one-off royalty payment for the year under consideration
    • are currently affected by a natural disaster.

    We will not approve a request to remain on a lower withholding due to:

    • the remote locality of the business
    • cash flow difficulties caused by the change to a more frequent reporting and payment cycle
    • additional costs for administration, including set-up costs and ongoing costs
    • you only having one payee
    • the person that completes the activity statement travelling frequently
    • computer or systems incompatibility.

    These reasons are not considered sufficient to allow you to remain on a lower withholding cycle.

    If you experience difficulty lodging your activity statement or paying amounts by the due date, you should contact us immediately to discuss your options.

    See also:

    Last modified: 12 Jul 2017QC 17220