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PAYG Withholding |
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Q1. What is PAYG withholding?
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Q2. What are my obligations when I withhold payments?
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Q3. What are the types of withholding?
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Q4. How much do I withhold?
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| Q1. What is PAYG withholding? |
| Answer: 'Withholding' means the process by which you deduct amounts from payments to others and remit these amounts to the ATO. Many businesses would have been familiar with remitting withholding amounts in the form of PAYE group tax deducted from their employees' wages. |
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| Q2. What are my obligations when I withhold payments? |
Answer: If you make payments from which you have to withhold, you have certain obligations under PAYG withholding. These obligations include:- registering for PAYG withholding
- notifying and paying the amounts you withhold, using an activity statement (or electronically if you are a large withholder)
- giving an end-of-year payment summary to recipients
- sending tax file number declarations to the ATO
- reporting annually to the ATO on all your withholdings.
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Q3. What are the types of withholding?
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Answer: Under PAYG withholding, you must deduct amounts from the following kinds of payments you make to others:- salaries, wages, allowances, bonuses or commissions paid to an employee
- payments to company directors
- payments to office holders (such as Members of Parliament)
- payments under a voluntary agreement
- payments under a labour hire arrangement
- income from certain investments where a Tax File Number is not quoted
- payments to suppliers who do not quote their Australian Business Number
- payments to members of the Defence Forces or police forces
- return to work payments
- eligible termination payments
- payments for unused leave
- compensation, sickness or accident payments.
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| Q4. How much do I withhold? |
Answer: Withholding from payments to employees and some others directly involved in your business should be in accordance with tax tables published by the ATO.
The tax tables take into account the personal income tax rates plus Medicare levy, any offsets or rebates, the Higher Education Contribution Scheme, residency status and other relevant matters.
Make sure you use the right tax table for your recipient, taking into account any information they may have provided you on a declaration.
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