PAYG Withholding: Who Qualifies and What You Get
Learn how the PAYG withholding system works for employers in Australia and how to keep your payroll compliant.
PAYG withholding is a system used by employers to take tax out of an employee's pay before they receive it.
Who it's for
This system is for employers who pay wages to their staff.
What you get
It provides a structured way to withhold tax directly from employee paychecks. This ensures that the tax owed by your employees is collected and sent to the government on their behalf.
What it costs you
There is no direct fee to use the system, but you will likely need to pay for payroll software that can integrate with the required reporting standards.
The catch to know
You must ensure your payroll settings are updated whenever the government changes tax tables following an annual budget. Failing to update these rates can lead to incorrect amounts being withheld.
How to apply
- Register your business for tax obligations.
- Set up payroll software that supports Single Touch Payroll (STP) reporting.
- Configure your software to calculate and withhold the correct amounts based on current tax tables.
- Report your payroll information through your software to the tax office.