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| Home » Topics on Tax » Pay as you go |
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Pay as you go (PAYG) |
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Pay as you go (PAYG) is the Australian Taxation system for keeping back tax revenue from employees, and other recipients, in their even payments from employers, and other payers, for example retirement benefit funds. It is basically used to collect Medicare payments, income tax, repayments and Higher Education Loan Programme (HELP).
If your organization has employees, you must keep back amounts from their pay and send the deducted amounts to the Tax Office and this process is called withholding done through the pay as you go (PAYG) withholding system. You must file your organization with the Tax Office when you are expected to deduct from payments to your employees.
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The amount to be withheld from an employee’s pay depends on the amount they are paid and the information an employee has provided in a Tax file number declaration (NAT 3092) and/or a Withholding declaration (NAT 3093). The Tax Office releases tax tables that indicate the amounts to withhold from monthly, fortnightly and weekly pays.
If your organization is small, it reports and pays the deducted amounts to the Tax Office monthly or quarterly while lodging your organization’s activity statements.
You are also expected to give each employee an annual payment summary of the amount deducted from them during the year. You also need to offer an annual report to the Tax Office about deducted amounts. Directors are treated similarly to employees for PAYG withholding purposes.
If your establishment pays wages or salaries or makes any other payment which comes under pay as you go (PAYG) withholding then your organisation must register. If you are applying for an ABN for your organisation, you can use the same form to register for PAYG withholding. Thus, these are the different characteristic features of pay as you go (PAYG) which will be of some help to you if you are running an organization or assisting it.
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