Payments to workers to ensure PAYG withholding obligations met
Business can not claim deductions for payments to workers if they have not met their pay as you go (PAYG) withholding obligations.
New rules took effect on Monday 1 July 2019 and apply to income tax returns lodged for the 2020 income year onwards.
If the PAYG withholding rules require an amount to be withheld, for example directors’ fees, your client must
- withhold the amount from the payment before they pay their worker
- report that amount to the ATO.
If your business client makes a mistake and withholds or reports an incorrect amount, they won’t lose their deduction. You should still help them correct their mistake as soon as possible to minimise penalties.
Deductions won’t be lost for failing to report payments on a Taxable payments annual report (TPAR) or a PAYG withholding payment summary annual report (PSAR).
Source: CPA Australia Release
Date: 16 July 2020
Coffs Coast Consulting Services
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