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PAYG withholding: A simple guide for businesses


What is PAYG withholding?

PAYG (pay as you go) withholding is an employer obligation in Australia to help payees meet their end of year tax liabilities. This means employers withhold a certain percentage of each employee’s pay to help them satisfy their annual tax obligations.

Who has to apply?

You must register for PAYG withholding before you’re first required to make a payment that is subject to withholding. Payments to employees, contractors or companies that haven’t quoted their Australian Business Number (ABN) are all subject to PAYG withholding.

Registering for PAYG 

If you have an ABN and a myGovID, you can register for PAYG withholding through the ATO’s online service portal. If you don’t have an ABN, you can register by phone or by filling out an Application to register a PAYG withholding account (form NAT 3377). You may also contact your BAS agent or registered tax agent for assistance.

How much do I need to withhold?

The ATO offers online tax tables and tax calculators to help you calculate PAYG withholding for different scenarios.

When do I need to pay and report PAYG withholdings?

The ATO has different requirements for paying and reporting withheld amounts, depending on the total of your withholding: 

Small withholders (withholds $25,000 or less annually)

Pay and report quarterly.

Medium withholders (withholds $25,001-$1 million annually)

Pay and report monthly.

Large withholders (withheld more than $1 million in the previous financial year)

Pay and report twice weekly. In some instances, the ATO may allow large withholders to use a GST credit to offset the PAYG liability.  

Annual payment summaries

Employers that aren’t using Single-Touch Payroll (STP) must give employees annual payment summaries/income statements. If employers are using STP, employees can access their own income statements through their myGov account. 

Automate PAYG withholding and reporting

You can calculate and report on your PAYG withholdings seamlessly with STP-compliant payroll software. All MYOB Business plans are STP Phase 2 compliant, gathering and reporting all the additional information that the ATO requires. Whether you’re a micro business looking for a simple payroll solution or a growing or established business in the market for accounting software, MYOB has you covered.

Try MYOB’s STP-2 compliant payroll and accounting software today. 

Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.

MYOB is not a registered entity pursuant to the Tax Agent Services Act 2009 (TASA) and therefore cannot provide taxation advice to clients. If you have a query concerning taxation including filing your BAS return or annual tax statements then you should consult with your accountant or other registered tax adviser.

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