Withholding amounts from payments

Under the Pay As You Go (PAYG) withholding system, a payer is required to withhold an amount in respect of tax from payments to employees and remit the amount to the Australian Taxation Office (ATO). The common law tests apply to determine whether a person is an employee for the PAYG rules.

The amount to be withheld from payments to an employee is determined by regulations or withholding schedules made by the Commissioner of Taxation.

In certain limited circumstances, there may also be a withholding obligation in respect of payments to contractors who do not obtain and quote their Australian Business Number (ABN).

See What obligations does an employer have to withhold amounts from employees?

Paying withheld amounts

Amounts withheld by an employer must be paid to the ATO. The method and frequency of making payments to the ATO depends on the employer’s status as a small, medium or large withholder.

See What are an employer’s obligations in regard to paying the ATO withheld amounts?

Other employer obligations

Employers that have withholding obligations under the PAYG system also have record keeping obligations and obligations to provide prescribed information to the ATO and to their employees.

See What other obligations do employers have in respect to the PAYG system?