Denial of deductions when PAYG withholding obligations not met

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Oct 15, 2019 | Posted in Business Advice
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From 1st July 2019 if a payment is made by a business and the PAYG Withholding rules have not been complied with than that payment will not be an allowable deduction of the business.

The way this works is that provided the PAYG Withholding obligations are met before being queried by the ATO than payments will remain deductible, meaning if flagged by the Commissioner than it will be too late.

The penalties, in addition to denial of the deduction, include administrative penalties and interest as well as the potential for director(s) to be made personally liable for the unpaid PAYG via the Director Penalty regime. This includes an estimate process whereby the penalties can be raised even in the event of non-lodgment of required documents.

The types of payments covered are:

  • Wages, salaries, bonuses, commission or allowances
  • Director’s fees
  • Religious practitioner’s fees
  • Labour hire payments
  • ABN withholding where contractor has not provided ABN



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