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PAYG withholding explained


When you pay employees and some contractors, you need to withhold tax from these payments. You do this by collecting PAYG withholding and sending the withheld amounts to the Australian Taxation Office (ATO) at regular intervals. By withholding amounts from payments you make, you help your payees meet their tax liabilities at the end of the financial year.

What you need to do if you have to withhold


If you make payments subject to withholding, you must:

  • register for PAYG withholding
  • 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

You won’t need to provide payment summaries to your employees or lodge an annual report to the ATO for amounts you’ve reported and finalised through Single Touch Payroll (STP). Find out more about STP on the ATO website.

Find out if you need to register


You have to collect PAYG withholding amounts from payments to:

  • your employees
  • other workers, such as contractors, that you have a voluntary agreement with to withhold PAYG amounts
  • businesses that don't quote their Australian business number (ABN) to you

If you have to withhold from payments, you must register for PAYG withholding before you’re first required to withhold an amount.

Register for PAYG withholding (and other taxes)

You can register for PAYG withholding online through the Business Registration Service. You can use the same form to register for other taxes at the same time.