Pay As You Go Tax is a relatively new term introduced to bring a broad range of different taxes under the one umbrella within the ATO.  Some of the taxes that are now included in PAYG were formerly known as Employer Group Tax, Provisional Tax, Prescribed Payment System Tax (PPS) and Foreign Residents Withholding Tax.

The PAYG tax system is divided into two main areas:

• PAYG Instalments
• PAYG Withholding

PAYG Instalments

PAYG Instalments are paid by Individuals, Super Funds, Companies and some other taxpayers so that the Tax Office receives tax instalments throughout the financial year to which the income tax return relates.  Hence the title Pay As You Go.

For most taxpayers the instalments are paid quarterly, just after the end of the quarter.  The instalments are paid on a Business Activity Statement or Instalment Activity Statement.

PAYG Withholding

Withholding from Salary and Wages

The most common form of PAYG Withholding is the employer’s obligation to deduct tax from its employees’ wages and remit it to the Australian Taxation Office.  With a streamlined Payroll system, we can ensure that this routine task is managed efficiently.

We can assist you with:

• Preparation and lodgement of all forms relating to PAYG
• Advice on PAYG matters, including grouping regulations
• Preparation of Annual Payment Summaries

Unlike the previous Prescribed Payments System, there is no obligation to withhold tax from payments to sub-contractor.  However, the sub-contractor can negotiate a “voluntary withholding” so that they are not left with a big tax bill at the end of the year.

TFN Tax Withholding on Bank Accounts

PAYG Withholding also includes Tax File Number (TFN) tax deducted from interest earned on a bank account where the owner of the bank account does not quote their TFN.

Tax Withheld from payments to Non-residents

Certain payments to foreign residents are required to have Non-Resident Withholding Tax deducted from the payment.  This withheld tax is then remitted to the ATO on the Business Activity Statement

Contact us today.

Disclaimer:
The above services are provided by Stanley & Stewart Accountants Pty Ltd ABN 76 114 691 673, trading as Stanley & Stewart Chartered Accountants, a company that is not licensed to provide financial planning services.
Any financial planning services required are provided by Stanley & Stewart Financial Planning Pty Ltd ABN 97 611 554 299, an Authorised Representative of Politis Investment Strategies Pty Ltd ACN 71 106 823 241 AFSL No 253125.
Liability limited under a scheme approved by Professional Standards Legislation.