What is PAYG?

Pay As You Go (PAYG) is the single integrated system for paying and tax and other withholding amounts. The PAYG system specifies three additional situations where withholding applies:

$image\bullet.gif$ Labour Hire Arrangements – Payments to a contract worker from a labour hire firm for work performed for a client of the labour hire firm.

$image\bullet.gif$ Voluntary Agreements – Pay As You Go (PAYG) voluntary agreements enable businesses to withhold amounts from payments they make to workers (such as contractors) to help the workers pay their income tax.

$image\bullet.gif$ ABN not quoted – Payments between two businesses where the business being paid does not quote an Australian Business Number (ABN) on an invoice. In these cases, the payer must withhold an amount from the payment and submit it to the ATO.

How do I report my PAYG withholdings?

Payment Summaries

There are five basic Payment Summaries:

$image\bullet.gif$ Payment Summary – Individual Non-Business, and the

$image\bullet.gif$ ETP Payment Summary

$image\bullet.gif$ Payment Summary – Voluntary Agreement

$image\bullet.gif$ Payment Summary – Labour Hire and Other Specified Payments

$image\bullet.gif$ Payment Summary – Withholding where ABN not quoted.

Business Activity Summaries

PAYG and withholding amounts is reported and paid using a single form, called the Business Activity Statement (if you are registered for GST) or an Instalment Activity Statement (if you aren't registered for GST).

To provide you with the information you need to complete the statement, Elite Payroll provides an Activity Statement Details Report which provide you with the payroll withholding information you'll need to complete your Business Activity Statement. If you export your payroll data to QuickBooks, the data required for your BAS or IAS will be transferred to QuickBooks along with your other payroll data.

How do I make my PAYG payments?

It is very important that you make your payments to the ATO on time and that you pay the correct amount. You can be subject to penalties if you don't deduct the right amount of tax instalments from your employee's pays, or if you don't pay all the tax instalments to the ATO by the due date.

In order to avoid penalties, it is important that you know how often you must make your payments, and when the payment deadlines are. If you aren’t sure, refer to the ATO website for further information, or contact the ATO directly.