Failure to withhold
Pay as you go (PAYG) withholding obligations mainly apply to businesses.
You're liable for a penalty if you fail to withhold or pay a PAYG withholding amount when required. This applies, for example, if you're required to:
- withhold from payments made to employees, directors, office holders or other individuals in various capacities
- withhold from payments to enterprises that do not quote an Australian business number (ABN) for a supply
- pay an amount for
- amounts withheld
- alienated personal services payments
- non-cash benefits.
The penalty is equal to the amount that you should have withheld or paid.
Company directors are legally responsible for their company meeting its PAYG withholding obligations.
The director of a company that fails to meet a PAYG withholding obligation in full by the due date automatically becomes personally liable for a penalty equal to the unpaid amount.
Businesses are liable for a penalty for failing to withhold or pay a PAYG withholding amount when required.