Changes to PAYG Withholding obligations

New penalties for business’ Pay As You Go (PAYG) withholding and reporting obligations will commence 1 July 2019.

You will only be able to claim deductions for payments made to employees and certain contractors where you have met the PAYG withholding rules for each payment.

Payments that are impacted include salary, wages, commissions, bonuses or allowances to an employee, payment under a labour-hire arrangement or payments for a supply of service.

Specifcally, the new laws will prevent an employer from claiming a deduction for payments to employees if they:

  • Fail to withhold an amount from the payment as required under PAYG withholding rules.
  • Fail to report a withholding amount to the ATO.

This measure highlights a key reason why governance across all employment tax is important. If you make a mistake by failing to withhold an amount or to report it and you voluntarily disclose this to the ATO before an audit or other compliance activity in regards to your tax affairs, your business will not lose its deduction. Taking early action to ensure your business is compliant to these updated PAYG withholding laws will make a difference to whether you remain eligible for deductions.

For advice on this matter, please contact your AGS Accountant to discuss


Published : 16 Apr 2019