Penalties for PAYG withholding understatements

If your business does not report and pay an amount to us for attributed PSI, penalties and the general interest charge (GIC) may apply.

If your business correctly uses a method other than the legislative method to work out its PAYG withholding obligations and there is a shortfall on the amount that should have been paid, we will remit the penalty on any shortfall that arises as a result of using that method.


A partner in a partnership paid PAYG instalments because the partnership was not aware of its obligation to pay additional PAYG withholding.

In this case, the partnership is penalised because it has failed to pay additional PAYG withholding amount as required. The penalty is equal to the additional PAYG withholding amounts that the partnership should have paid to us.

However we may reduce the penalty amount. When deciding on any reduction, we will consider the business' conduct both at and leading up to the time that the failure to pay the additional PAYG withholding amounts occurred.

Any PAYG instalments paid by the partners may also be considered. Any reductions in penalty are considered case-by-case.

End of example
    Last modified: 14 Sep 2016QC 17515