PAYG withholding is a legal requirement that means you must withhold amounts for income tax purposes.
As an employer of staff, you’re required to withhold tax from payments you make to them. Occasionally, you may also have to withhold tax from payments you make to other workers, such as contractors.
In addition to staff, PAYG also covers payments you make to other businesses. If you purchase from a business that does not quote an Australian Business Number (ABN) on an invoice or other document, you must withhold an amount for tax purposes.
You need to register your business by the day on which you’re first required to withhold an amount from a payment. Once registered, you must send all withheld amounts to the Australian Taxation Office (ATO).
What to do...