From 1 July 2019, employers can only claim deductions for payments made to workers where they’ve met the pay as you go (PAYG) withholding obligation for that payment.

Where the PAYG withholding rules require an amount to be withheld, employers must:

• withhold the amount from the payment before they pay their worker and,
• report that amount to the ATO.

Employers will not lose their deduction if they withhold:

• an incorrect amount by mistake; they can minimize any potential penalties by correcting the mistake through lodgment of a voluntary disclosure of the mistake.
• the correct amount but make a mistake when reporting, they must correct the amount as soon as possible.

This change is a part of the government response to recommendations from the Black Economy Taskforce.

In particular, employers will lose their deduction if there is a withholding or reporting requirement and no amount is withheld or reported to the ATO, unless they make a voluntary disclosure of the mistake prior to the ATO beginning an examination of the their affairs.

If these changes affect you and you have any concerns or questions, please do not hesitate to contact our office on 08 8523 0133 or via email at for more information.