Significant changes are coming to your Pay As You Go (PAYG) withholding cycle, effective 1 July 2024.
The Australian Taxation Office (ATO) regularly reviews PAYG withholding cycles based on businesses’ annual withholding amounts. Your reporting and payment obligations may be subject to adjustments depending on your withholding activity.
Your new withholding reporting and payment cycle will be based on the amount you withheld and reported under your Australian Business Number (ABN) in all branches in 2022-23.
You will transition to a monthly reporting and payment cycle if your business falls within the medium withholder category (withholding between $25,001 and $1 million).
This entails monthly reporting your PAYG withholding amounts on your activity statement and ensuring timely payments by the due date. For clients classified as large withholders (those withholding over $1 million), the ATO will issue a new Payment Reference Number (PRN) for payment on set dates.
You’ll need to:
- Report your PAYG withholding amounts on your activity statement monthly
- Pay by the monthly due date
- Check that your stated withholding matches the amounts you reported using Single Touch Payroll (STP).
For clients classified as large withholders (those withholding over $1 million), the ATO will issue a new Payment Reference Number (PRN) for payment on set dates.
It’s important to note that large withholders are exempt from reporting PAYG withholding on their activity statements but are still required to reconcile reported Single Touch Payroll (STP) amounts with paid amounts.
To ensure a smooth transition to the new withholding reporting and payment cycle, it is recommended that your payroll software be updated before 1st July. This will ensure alignment with the revised due dates and compliance with ATO requirements. If you anticipate a decrease in your 2024-25 PAYG withholding amount below the relevant threshold and wish to retain your current withholding cycle, you can
request to do so.
Simply complete and submit to the ATO the Request to Review ATO Initiated PAYG Withholding Cycle Change form within 21 days of receiving the ATO’s notification letter. Provide the reason for your request. This should include your change in circumstances and the estimated amount you expect to withhold in 2024-25.
Want to know more about the potential PAYG changes and how they could affect your business? Start a conversation with us today
Disclaimer:
The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.