Pay as you go (PAYG) withholding

Do you need to register?

You must register for PAYG withholding if you need to withhold an amount from a payment.

The most common payments you need to withhold amounts from are payments you make to:

  • your employees
  • your directors
  • businesses that do not quote their ABN to you.

Depending on your circumstances, you may also have to withhold amounts from payments you make to:

  • contractors who have a voluntary agreement with you
  • individuals under a labour hire arrangement
  • employees on termination of their employment.

Sole traders and partnerships

If you operate your business as a sole trader or a partnership and you draw amounts from the business, this is not a wage and you do not have to withhold from these drawings. You make some provision for your income tax liability through PAYG instalments. However, if you have other employees, you must withhold amounts from payments you make to them under PAYG withholding.

Companies and trusts

If you operate your business as a company or trust with a corporate trustee, it is likely you're either an employee or director of that business. If the company or corporate trustee pays you a wage or directors fees, it has the same responsibility to withhold amounts from these payments.

See also:

Last modified: 11 May 2015QC 31790