Details About Pay As You Go (PAYG) Registration

Information verified correct on December 7th, 2016

All about Pay As You Go (PAYG) tax

Pay as you go (PAYG) tax is one of the many different types of taxes that has to be paid by an Australian business. This type of tax is typically divided into two main categories namely, Pay As You Go Withholding and Pay As You Go Instalments. In this article we will focus on both these types of PAYG taxes and understand the main differences between them.

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How to submit PAYG withholding in the ATO business portal

  • Click on “Business Registration Details” on menu to the left
  • Choose “Registrations” from options and click next
  • Tick Activity Statement and click on Tax Type Summary
  • Click on Add Tax Type
  • There you can choose GST and IT Withholding (PAYGW)

Pay As You Go (PAYG) withholding

The Australian Taxation Office has a PAYG withholding system whereby a business has to withhold certain amount of money as PAYG taxes from the salary or wages paid to their employees. Not just to employees of the company, but if you make payments to other businesses that have not provided their Australian Business Number (ABN) to your company, or you make payments to contractual workers, even then you may have to withhold PAYG taxes from the money paid to them. The money so withheld is then deposited with the ATO on behalf of the individuals or businesses from whom the money was withheld.

The reason for the PAYG withholding system is to enable people to meet their income tax obligations and liabilities at the end of the year. If no money was withheld as PAYG taxes and the entire salary was paid to employees, then they might find it very difficult to pay their income tax at the year-end as all the money could be spent. Hence, to reduce their burden of paying the taxes, the ATO makes it compulsory to keep paying the PAYG taxes in regular instalments. This type of PAYG tax is hence not an additional tax burden for a business as it is simply withheld from another person’s payment.

If your business is making any type of payments to employees, contract workers, or other companies that are subject to PAYG withholding, then your business must fulfil the following obligations:

Register for PAYG

You need to register your business with the Australian Taxation Office for PAYG tax. In order to register for PAYG, you should have an ABN number for your business. If you have not registered for ABN, you can register for both these things at the same time. It is important to note that your application for PAYG registration should be completed before the day you have to withhold your first amount as PAYG tax. The register for an ABN you must visit the Australian Business Register website and apply. Then you'll have to call 1300 720 092 to get a copy of the appropriate form to add a new business account. After this you'll have to call 13 28 66.

Withhold the appropriate amounts from payments

Once you have registered for PAYG withholding, you then need to start withholding the appropriate amount of PAYG tax from eligible payments made by your business. The amount that you need to withhold will depend on the income of the recipient as well as the amount of payment being made by you.

Pay the withheld amount to ATO

Every business needs to submit a report of the PAYG amount that they have withheld and pay such amounts to the ATO regularly. The size of your business and amount withheld will determine the frequency of the payments that you need to make. While the amount withheld may have to be paid in instalments, you have to submit an annual withholding report to the tax authorities. In order to submit an accurate report, you will also be required to maintain certain books and records of withholding payments.

In addition to the above, you will also need to advise your employees or other contractual workers about the amount that you have withheld from their payments so that they can file their income tax returns accordingly.

Pay As You Go (PAYG) instalments

While PAYG withholding is a tax that is withheld from others, PAYG instalment is a tax that is the sole liability of your business. This type of tax has to be paid according to the expected tax liability that your business may incur at the end of the year on business activity income as well as investment income. Hence, instead of paying the tax at the end of each year in one lump sum payment, the ATO requires you to pay the expected amount of tax as PAYG instalments several times a year. The instalments will not be an exact reflection of your tax liability but will simply be an estimated amount depending on previous year incomes. Hence, PAYG instalments only start from the second year of your business.

At the end of the year, your business will compute its exact tax liability through the income tax returns and file it with the tax authorities. Your return will be assessed and your actual tax liability for that year will be determined. All amounts paid as PAYG instalments will be credited as tax already paid. After crediting the PAYG instalment amount, if your business still has pending tax liability then you will have to pay additional tax. However, if the PAYG instalments are higher than your actual tax liability, you will be eligible for a tax refund.


The ATO sends letters to all businesses that have to pay PAYG instalments. If you receive such a letter, you will need to register for PAYG and start paying regular instalments to the tax office.

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She is currently studying a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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30 Responses to Details About Pay As You Go (PAYG) Registration

  1. Default Gravatar
    Judith | October 26, 2016

    Are PAYG instalments compulsory?

    • Staff
      Clarizza | October 27, 2016

      Hi Judith,

      Thanks for your question.

      The ATO typically notifies you if you are required to make PAYG instalments. The ATO makes this assessment based on a criteria and your tax returns.

      Regards,
      Clarizza

  2. Default Gravatar
    Eben | January 3, 2016

    Hi I am trying to work out how to register for PAYG through the business portal. I have followed the links you had posted previously, they direct me to login to business portal, but once I am in I cannot find the option to register anywhere on the business portal.

    • Staff
      Shirley | January 4, 2016

      Hi Eben,

      Thanks for your question.

      Please see this page from the ATO for more information on registering your business for PAYG. You’ll need an ABN and can register through bp.ato.gov.au

      Hope this helps,
      Shirley

  3. Default Gravatar
    Tung | November 8, 2015

    I would like to ask for the fees for registration pay as you go withholding ?

    • Staff
      Elizabeth | November 11, 2015

      Hi Tung,

      Thanks for your question.

      There are no fees to register for PAYG withholding. Once you have registered for PAYG withholding, you then need to start withholding the appropriate amount of PAYG tax from eligible payments made by your business.

      I hope this has helped.

      Thanks,

      Elizabeth

  4. Default Gravatar
    julie | August 17, 2015

    What % of what you earn goes to the taxation office for paying on our abn i know that if we put more aside each week then we shouldn’t get hit with a big tax bill but there is no stipulated % shown in any information given please advise.
    thanks

  5. Default Gravatar
    Andy | November 10, 2014

    Hi,

    not sure if this is still applicable, but i am struggling to find the link on the business portal to register for PAYG with holding as well.. if there is still a link could i have that emailed to me? thank you

    • Staff
      Elizabeth | November 11, 2014

      Hi Andy,

      Thanks for your question.

      I have emailed you the link to register.

      Thanks,

      Elizabeth

  6. Default Gravatar
    Kaihla | September 1, 2014

    Hi can you please send me the link to find where to register for PAYG

    • Staff
      Shirley | September 2, 2014

      Hi Kaihla,

      Thanks for your question.

      Please see this page to register for PAYG.

      Cheers,
      Shirley

  7. Default Gravatar
    VeeBee | March 8, 2014

    I am also having trouble finding the link to register for PAYG withholding. Please send me the link

    • Staff
      Elizabeth | March 10, 2014

      Hi VeeBee,

      Thanks for you comment.

      I have just emailed you the link, it should now be in your inbox.

      Thanks,

      Elizabeth

  8. Default Gravatar
    | February 27, 2014

    hi, I’m having trouble finding PAYG withholding link in Business Portal also. Can you advise please?
    thanks.

    • Staff
      Shirley | February 27, 2014

      Hi Penny,

      Thanks for your comment.

      I’ve emailed you a link, please check your inbox.

      Cheers,
      Shirley

  9. Default Gravatar
    Andy | January 8, 2014

    Hi, I used to work in a University as a researcher only and have permanently left Australia last October. I have finished 2013-2014 financial year tax refund when I left Australia. Several days ago I was surprised to receive a PAYG instalments letter from ATO telling me to pay instalments. I was wondering whether you can tell me my qualification to pay this. I’m really confused about this instalment that I never quite know this.

    • Staff
      Marc | January 9, 2014

      Hello Andy,
      thanks for the question.

      You may wish to contact the ATO directly about this matter, and if you feel as though it’s unfair, lodge a dispute. I’ve emailed you more information about this.

      I hope this helps,
      Marc.

    • Default Gravatar
      Andy | January 9, 2014

      Thanks Marc,

      I’ll have a try.

      Cheers,
      Andy

  10. Default Gravatar
    Renae | December 7, 2013

    Hi, I am exactly the same as your other questions- I cannot find the link in business portal to register for the PAYG withholding, can you tell me where it is please?

    • Staff
      Marc | December 9, 2013

      Hello Renae,
      thanks for the question.

      I’ve emailed you the relevant page for this.

      Cheers,
      Marc.

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