The ATO has published a useful checklist about your PAYG obligations if you hire a contractor. If the contractor doesn’t provide you with their ABN:
• you generally need to withhold 47% from payments to them
• give a completed PAYG payment summary – withholding where ABN not quoted to the contractor
with their net payment, or as soon as practicable afterwards
• include the payments in your PAYG withholding where ABN not quoted – annual report and lodge
the report with the ATO by 31 October.
If the contractor is an individual who has a PAYG withholding voluntary agreement with you:
• work out the PAYG amount to withhold from payments to the contractor – use the tax withheld
calculator or tax tables online (take into account any information provided by the contractor in a
withholding variation or withholding declaration
• by 14 July, provide a PAYG payment summary – business and personal services income to the
contractor showing the total amounts paid and withheld
• include the payments in your PAYG payment summary annual report and lodge the report with
the ATO by 14 August.
If you have to withhold PAYG amounts for any reason:
• if you haven’t withheld before, you need to register for PAYG withholding straightaway
• report and pay the PAYG withholding amounts to the ATO in your BAS which is usually quarterly
or monthly for most businesses. A business withholding more than $1 million per year reports and
pays more often. ■
Visit the ATO website to ensure you meet your obligations.