PAYG:

PAYG Instalments

PAYG instalments are used to collect amounts towards your expected income tax liability on your business and investment income during the income year. 

Your actual tax liability is worked out at the end of the income year when we assess your annual income tax return. Your PAYG instalments are credited against your assessment to work out if you owe more tax or are owed a refund of some of the tax you have paid. The ATO will write to tell you if you must pay PAYG instalments.

PAYG Withholding

Pay as you go (PAYG) withholding is a system for withholding amounts from payments you make to employees and businesses so they can meet their end-of-year tax liabilities.

You will have withholding obligations if you:

–      have employees

–      have other workers, such as contractors, and you enter into voluntary agreements to withhold amounts from payments you make to them, or

–      make payments to businesses that do not quote their Australian business number (ABN).

If you make payments subject to withholding, you must:

–      register for PAYG withholding

–      withhold amounts from wages and other payments

–      lodge activity statements and make payments to us

–      provide payment summaries to employees and other payees

–      provide us with a PAYG withholding payment summary annual report