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  • 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.

    The quickest way to change a withholding cycle is to make the request online through the Business Portal or Online services for agents.

    Find out about:

    Requesting a change

    You or your registered tax or BAS agent can request a change to your withholding cycle if your annual withholding amounts change. You can:

    • send your request online through the Business Portal or by mail through Online services for agents
      • select the topic Pay as you go
      • select the relevant subject
        • Withholding – Cycle change Request – withholding amount less than $1 million
        • Withholding – Cycle change Request – withholding amount more than $1 million
         
       
    • phone us so we can discuss your circumstances with you.

    If you don't have access to our online services you can 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 or your registered agent need to send your request to us within 14 days of receiving our letter.

    Next step:

    Submit your request online through the Business Portal or Online services for agents mail option:

    • select the topic Pay as you go
    • select the subject 'Withholding – ATO cycle change letter received – request to remain on current cycle'
    • attach the completed Request to remain on a lower withholding cycle (ATO initiated PAYG withholding cycle change) form

    If you don't have access to our online services you can:

    • fax your completed form to 1300 730 298
    • apply in writing and send it to

    Australian Taxation Office
    PO Box 1129
    PENRITH  NSW  2740

    Note: When you apply in writing or fax, the form must be placed as the front page.

    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 not-for-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: 13 Mar 2020QC 17220