Question

What does PAYG tax withheld involve? (in Australian Accounting Environment) (Please type up your answer) Discuss in 50 to 80 words.

Answer 1

Pay as you go (PAYG) is a withholding tax which requires you to pay incremental amounts which accumulate towards your expected end of year income tax liability. Before you lodge your tax income tax return, It is important to finalize your PAYG installments. This will ensure that your income tax assessment takes into account the contributions you have paid throughout the year.

As a business owner, you have an obligation under the PAYG withholding rules to collect tax from the payments you make to employees and certain businesses to ensure that they meet their end-of-year tax liabilities.

To determine whether or not you have withholding obligation, check if the following applies:

• You employ people;
• You employ other workers such as contractors and both of you are entered into a voluntary agreement to withhold amounts from your payments to them;
• You make payments to businesses that do not quote their ABN

If this criteria applies to your business you must register for PAYG withholding (if you have not already) before you are first obliged to withhold a partial amount of a payment.