Payers, such as employers, are required to withhold tax from the payments they make to you and send those payments to the Tax Office regularly. When you lodge your income tax return at the end of the financial year, you will be entitled to a credit for the amount of tax which has been withheld from your pay. This amount is shown on your payment summary. Your payer works out how much tax to withhold based on information you provide in your Tax file number declaration and Withholding declaration.
Withholding rates are calculated on the basis that, if your pay and circumstances remain consistent throughout the year, you may be entitled to a small refund when you complete your tax return at the end of the financial year.
This system is called pay as you go (PAYG) withholding.
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