Apply for an ABN
You may need to apply for a separate Australian Business Number (ABN) for business under administration or bankrupt estate.
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.
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
- 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).
- An ETP includes the part of a genuine redundancy payment or early retirement scheme payment that exceeds the tax-free threshold.
- 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.
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
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
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:
- on paper, using ATO printed forms.
For more information, refer to Annual reporting
Guide for administrators and trustees about their PAYG withholding obligations.