Pay as you go (PAYG) withholding obligations for not-for-profit organisations are the same as for businesses. Organisations that are exempt from income tax are not exempt from PAYG withholding obligations.
If your organisation has employees, you must withhold amounts from their pay and send the withheld amounts to us through the PAYG withholding system.
You must register your organisation with us when you are required to withhold from payments to your employees and/or your independent contractors.
Under the PAYG system, independent contractors can provide for their own income tax liability by entering into voluntary agreements authorising your not-for-profit organisation to withhold amounts from their payments.
If your organisation is in a labour hire arrangement, it must withhold from payments to the labour hire firm if the firm has not quoted its ABN.
If your organisation provides workers to its clients under a labour hire arrangement, it must withhold from payments to these workers.
When a new employee starts provide them with a Tax file number declaration (NAT 3092) to complete and return to you.
If any of your employees or other payees has a Higher Education Loan Program (HELP), Trade Support Loan (TSL) or Financial Supplement debt, they must advise you of this. Your not-for-profit organisation will then need to withhold additional amounts from their payments.
To work out the amount to withhold from payments, either:
- use the tax withheld calculator (you can also download the ATO app for the simplified version of the calculator)
- obtain the relevant tax tables for withholding.
See also:
State and territory payroll tax
Payroll tax is a tax on the wages paid by employers. Employers are liable for payroll tax when their total Australian wages exceed a certain level called the 'exemption threshold'. Exemption thresholds vary between states and territories.
The payroll tax obligations for not-for-profit organisations are the same as for businesses, except in certain circumstances.
Some organisations may be exempt from payroll tax provided specific conditions are satisfied. These organisations may include religious institutions, public benevolent institutions, public or not-for-profit hospitals, not-for-profit non-government schools and charitable organisations.
You need to direct enquiries about state and territory taxes to the relevant state or territory revenue office and not to us.
See also:
If your not-for-profit organisation has employees, you must withhold amounts from their pay and send the amounts to us. You may also have to withhold in other circumstances, for example, when you make a payment to an independent contractor under a voluntary agreement.