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Changes to your pay as you go withholding cycle

Your pay as you go (PAYG) withholding cycle may change from 1 July

The ATO reviews PAYG withholding cycles every year, basing reviews on a business’s annual withholding amount.

The ATO writes to employers and tax agents in April to advise if a PAYG withholding cycle is changing. If affected, your reporting and paying obligations will change from 1 July.

Your new withholding reporting and payment cycle will be based on the amount you withheld and reported under your Australian Business Number (ABN) in all branches in 2022-23.

Medium withholders

You’re classified as a medium withholder if you withheld from $25,001 up to $1 million.

You’ll need to:

  • report your PAYG withholding amounts on your activity statement monthly
  • pay by the monthly due date
  • check that your stated withholding matches the amounts you reported using Single Touch Payroll (STP).

Large withholders

You’re classified as a large withholder if you withheld more than $1 million. You’ll get a new Payment Reference Number (PRN) to quote when you pay on the set payment dates.

You’re not required to report PAYG withholding on your activity statement. You should still reconcile your reported STP and paid amounts.

Changing your withholding reporting and payment cycle

You’ll need to make the changes to your payroll software before 1 July, to align your withholding reporting payments with the new due dates.

You can ask to stay on your existing cycle if you estimate your 2024-25 PAYG withholding amount will be less than the relevant threshold.

To do this, submit a completed Request to review ATO initiated PAYG withholding cycle change form within 21 days of receiving an ATO letter. Provide the reason for your request. This should include your change in circumstances and the estimated amount you expect to withhold in 2024-25.

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For more information, visit ATO annual review of PAYG withholding cycles and review your record-keeping practices.

Source: ATO

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