Taxation Administration Act 1953
Part 2‑5—Pay as you go (PAYG) withholdinPart 2‑5—Pay as you go (PAYG) withholding
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Schedule 1—Collection and recovery of income tax and other liabilities
Note: See section 3AA.
Chapter 2—Collection, recovery and administration of income tax
Part 2‑1—Introduction to the Pay as you go (PAYG) system
Division 6—Guide to Parts 2‑5 and 2‑10
6‑1 What Parts 2‑5 and 2‑10 are about
To help taxpayers meet their annual income tax liability, they are required to pay amounts of their income at regular intervals as it is earned during the year. The system for collecting these amounts is called “Pay as you go”.
Amounts collected under this system also go towards meeting liability for Medicare levy and liability to repay debts under certain income‑contingent loan schemes.
Table of sections
6‑5 The Pay as you go (PAYG) system
6‑10 How the amounts collected are dealt with
6‑5 The Pay as you go (PAYG) system
(1) Parts 2‑5 and 2‑10 establish the PAYG system, which has 2 components: • PAYG withholding (Part 2‑5) • PAYG instalments (Part 2‑10). PAYG withholding (2) Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner.
For a list of the payments and other transactions to which
PAYG withholding applies, see Division 10
PAYG instalments (3) You pay PAYG instalments directly to the Commissioner. These are usually based on your GDP‑adjusted notional tax or your ordinary income for a past period, but excluding: • income subject to PAYG withholding (with certain exceptions) • exempt income, or income that is otherwise not assessable. An instalment is usually paid after a quarter, but some taxpayers are eligible to pay an annual instalment after the end of the income year.
6‑10 How the amounts collected are dealt with
You are entitled to credits for the amounts of your income that are collected under the PAYG system. The credits are applied under Division 3 of Part IIB against your tax debts, and any excess is refunded to you.
Part 2‑5—Pay as you go (PAYG) withholding
Division 10—Guide to Part 2‑5
10‑1 What this Part is about
Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner. If the payment is personal services income that is included in the assessable income of someone else under Division 86 of the Income Tax Assessment Act 1997, the payer must pay such an amount to the Commissioner at a later date.