What is PAYG withholding?
Understand PAYG withholding and when businesses may need to withhold amounts from payments.
Summary
PAYG withholding is a system where businesses withhold amounts from certain payments, such as wages paid to employees, and report and pay those amounts to the ATO.
What this means
PAYG withholding commonly applies when a business has employees, but it can also apply to other payment types. It is different from PAYG instalments, which are prepayments toward the business owner’s or entity’s own expected tax.
Businesses may need to register for PAYG withholding before withholding amounts.
Typical actions
- Check whether the business makes payments subject to PAYG withholding.
- Register for PAYG withholding if required.
- Withhold the correct amounts from payments.
- Report and pay withheld amounts to the ATO.
- Keep payroll and payment records.
Official ATO sources
Last checked: 20 June 2026
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Related questions
- What are PAYG instalments?
- What tax obligations do employers have?
- What is Single Touch Payroll?
- What is the difference between employee and contractor?
Important notice: Tax Clarity is an independent information tool. This page provides general information based on official sources. It does not provide tax, legal, financial, or accounting advice. Tax rules can change, and how they apply depends on your circumstances. For advice about your situation, speak with a registered tax agent or qualified professional.
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