ATO gets tough on business reporting PAYG withholding tax for employees and contractors

ATO gets tough on business reporting PAYG withholding tax for employees and contractors

Effective from the 1st July 2019 the ATO has announced a proposed change of rules for businesses claiming a tax deduction for PAYG Withholding payments for employees and/or contractors.

In short, you could be denied your ability to claim a tax deduction if you do not meet your obligations when it comes to Pay-As-You-Go withholding.

As a business owner you need to ensure you are;

  • Withholding tax from employee wages and salaries, contractors’ payments, this also applies to commissions, bonuses, allowances and director’s fees.
  • Deducting PAYG Withholding tax at the top marginal tax rate for suppliers who do not quote an ABN
  • Reporting and lodging your PAYG withholding tax in the appropriate Business Activity Statement or Instalment Activity Statement by the due date

What happens if you don’t meet the PAYG withholding tax obligations?

  • You may permanently lose your tax deduction for wages paid

What happens if you make a mistake?

  • If you make a mistake, and proactively notify the ATO before they ask you an exemption is available. And note that the ATO’s data collection systems are very good at picking up non-compliance and then making an enquiry.

What you can do to prepare:

To make sure you comply with the withholding requirements PrimeAdvisory strongly recommends that you take this opportunity to;

  • Review your systems for PAYG withholding tax and reporting
  • Ensure you have a valid ABN from all suppliers

With any questions or concerns about your PAYG withholding tax obligations please Contact us.


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