PAYG Withholding Lodgement Deadlines: What Every Employer Needs to Know
Pay As You Go (PAYG) withholding is a crucial part of the Australian tax system, requiring employers to withhold tax from payments made to employees, contractors, and other payees. These withheld amounts are then reported and paid to the Australian Taxation Office (ATO) at regular intervals. Understanding and meeting PAYG withholding lodgement deadlines is essential for employers to remain compliant and avoid penalties.
This article outlines what every employer needs to know about PAYG withholding lodgement deadlines and how to stay on top of your obligations.
What Is PAYG Withholding?
PAYG withholding is a system where employers deduct tax from employee wages, salary payments, or other relevant payments and remit it to the ATO. This ensures that employees meet their tax obligations throughout the year, rather than in one lump sum at tax time.
If your business employs staff or makes payments that require withholding, such as to contractors under a voluntary agreement, you must register for PAYG withholding and lodge regular activity statements.
PAYG Withholding Reporting Options
The ATO determines how often you must lodge PAYG withholding reports and payments based on the size of your business and the amount withheld:
1. Small Withholders
Definition:
Withhold less than $25,000 per year
Lodgement Frequency:
Quarterly
Due Dates:
Q1 (Jul–Sep): 28 October
Q2 (Oct–Dec): 28 February
Q3 (Jan–Mar): 28 April
Q4 (Apr–Jun): 28 July
2. Medium Withholders
Definition:
Withhold between $25,001 and $1 million per year
Lodgement Frequency:
Monthly
Due Date:
21st of the following month (e.g., July PAYG due 21 August)
3. Large Withholders
Definition:
Withhold more than $1 million per year
Lodgement Frequency:
More frequent – typically within two business days of withholding
Payment:
Via electronic funds transfer (EFT) using a special payment reference number (PRN)
How to Lodge PAYG Withholding
Most employers lodge PAYG withholding amounts through:
1. Business Activity Statement (BAS):
Includes PAYG withholding, GST, and other tax obligations.
2. Installment Activity Statement (IAS):
For businesses that do not need to report GST.
Employers also need to report wages and PAYG withholding amounts through Single Touch Payroll (STP) with each pay run. STP reporting does not replace BAS/IAS obligations but works alongside them.
What Happens If You Miss a Deadline?
Missing a PAYG withholding lodgement deadline can lead to:
- Failure to lodge (FTL) penalties
- Interest charges on overdue payments
- Loss of tax deductions — if amounts are not reported and paid correctly, you may be denied a deduction for those wages.
To avoid issues, set reminders and consider using accounting software or engaging a registered BAS or tax agent.
Tips to Stay Compliant
- Register for PAYG withholding as soon as you hire staff or make contractor payments.
- Keep accurate payroll records and reconcile them regularly.
- Use STP-enabled payroll software to automate reporting.
- Set calendar reminders for key due dates.
- Seek professional advice if you are unsure about your withholding obligations.
Conclusion
PAYG withholding lodgement deadlines are an essential part of your business’s tax obligations. By understanding your reporting frequency, staying organised, and using the right tools, you can ensure compliance and avoid costly penalties. If managing PAYG withholding feels overwhelming, consider partnering with a professional accountant or BAS agent for peace of mind.
