Any business who has employees or is about to hire an employee will have to deal with pay as you go (PAYG) withholding. As an employer, you collect income tax from the pay you give to your employees. You will then pay that money to the ATO come tax time.
This system works similarly to GST, in which you are also collecting 1/11th of the cost of an item for the ATO when a customer purchases it, which is then recorded and sent to the ATO when you lodge your BAS. But many business owners are unsure as to when the similarities between PAYG withholding and GST end. To help you, we have created this guide.
First of all, do I need to register?
It will depend on your situation. If you have employees, other workers or contractors who you have entered into a voluntary agreement with to withhold amounts from your payments to them, or you make payments to a business without an ABN number, then yes, you do need to register with the ATO. They need to be informed that you have employed someone and are going to be using PAYG withholding for their income tax.
What obligations do I have as an employer when I register?
Once you become PAYG registered, you will have some obligations to fulfil in order to remain compliant with the ATO. First, you will need to withhold amounts from wages and other payments made to employees. Next, you will need to lodge activity statements and pay the withheld amount to the ATO. Finally, you will need to provide a PAYG withholding payment summary annual report by August 14 to the ATO.
How do I register for PAYG withholding?
The easiest way to register for PAYG withholding is by registering at the same time as for GST. This way you can fill out a simple form on gstregister.com.au and select PAYG withholding registration which is an optional extra.
With GST Register you get qualified, registered tax agents, who are able to assist you through the entire registration process. We are able to ensure that you have filled the registration form correctly before we send it to the ATO on your behalf.
If you have any further questions regarding PAYG withholding, contact GST Register today.