Register for Pay As You Go (PAYG) withholding
What is Pay As You Go (PAYG) withholding?
When you make payments to employees and some contractors, you need to withhold an amount and send it to the Australian Taxation Office (ATO) at regular intervals. The ATO calls this Pay As You Go (PAYG) withholding.
When do I have to register?
You'll have withholding obligations if any of the following apply:
- you have employees
- you have other workers, such as contractors, and you enter into voluntary agreements to withhold amounts from your payments to them
- you make payments to businesses that don't quote their Australian business number (ABN).
If you make payments subject to withholding, you must:
- register for PAYG withholding as soon as you know you need to withhold
- withhold amounts from wages and other payments
- lodge activity statements and pay the withheld amounts to the ATO
- provide payment summaries to all employees and other payees by 14 July
- provide a PAYG withholding payment summary annual report to the ATO by 14 August.
How do I register for PAYG withholding?
You can register for PAYG withholding and other taxes on the Business Registration Service.
Who can apply?
The Business Registration Service is available for:
- New businesses starting as a sole trader, partnership, company, trust, joint venture or superannuation fund who can apply for tax registrations with an ABN, business name or company registration.
- Existing businesses with an ABN, who can apply for tax registrations or an AUSkey login.
PAYG instalments VS PAYG withholding explained
It's important to note that PAYG withholding is different to PAYG instalments.
If you're an employer, PAYG withholding is your legal requirement to keep a portion of payments made to your employees and other businesses, which you then pay to the ATO.
You complete this on your employee's behalf by withholding some of their pay as tax. Your employees can make a claim against the amount withheld at the end of the financial year.
You may also have to withhold tax from payments you make to other workers, such as contractors.
PAYG instalments allow you or your business to meet your income tax obligations. PAYG instalments are generally paid by business owners, investors and sub-contractors who earn a certain amount of income. If this is you, find out more on PAYG instalments on our Register for PAYG instalments page.
What to do...
Register for PAYG withholding on the Business Registration Service.
The ATO website has more on:
- payments you need to withhold from
- paying and reporting withheld amounts
- PAYG withholding payment summaries and annual reports
- annual reporting and lodgment dates
- lodging your PAYG withholding annual reports online, including a YouTube video
- Check out the ATO's Do you have to pay PAYG instalments? for more information on PAYG instalments.
- If you still wish to pay instalments towards your end of year tax income, you can voluntarily re-enter PAYG instalments by contacting the ATO on 13 28 61.
- There are a number of other taxes that you may be required to register for. To understand the different types that may apply to your business, and how to register, swing by our topic on Tax
- If you're an independent contractor, your entitlements and obligations differ from an employee in many ways. Save time and money by being aware of your rights and responsibilities. Read our Independent contractors topic.
- Speak to your accountant for more personal advice about your business and tax.