Calculating theoretical PAYG withholding

To estimate theoretical PAYG withholding liability, we:

  1. Determine the amount of salary and wage payments in Australia from ABS National Accounts data.
  2. Subtract income not subject to withholding. This includes payments in kind (fringe benefits tax), salary sacrifice into superannuation, employee share schemes and Defence exempt income.
  3. The resulting amount is assumed to represent salary and wages subject to withholding.
  4. Multiply this amount by the average rate of withholding to calculate the withholding amount that should be reported and remitted to us.
    Last modified: 05 Nov 2015QC 47278