About the guide
This guide will assist you to complete the pay as you go (PAYG) withholding part of your activity statement.
PAYG withholding payers (generally businesses and other enterprises) must withhold tax from certain payments made to others. These payments include:
- payments to employees, company directors and office holders
- payments made to workers under labour hire arrangements
- payments under voluntary agreements
- payments where an Australian business number (ABN) has not been quoted in relation to a supply
- other amounts withheld, such as interest, dividend and royalty payments, that were excluded in label W2 or W4.
You must report these withheld amounts in the PAYG tax withheld section of your BAS and pay all withheld amounts to us.
Find more information on how to lodge and how to pay your BAS.
Example activity statement
The following example shows a quarterly activity statement.
Your activity statement will contain all your reporting requirements and may not look exactly like this example.
Example: Business activity statement - front
End of example
To make sure we scan your activity statement correctly:
- print clearly using a black pen
- leave boxes blank if they don't apply to you, unless we ask you to write '0' (do not use NIL)
- show whole dollars only (round cents down to the nearest whole dollar)
- don't report negative figures or use symbols such as +, -, /, $
- don't write any additional information on your activity statement – contact us if your details have changed.
Example: Business activity statement - rear
PAYG withholding labels on your activity statement
Ensure the amounts that have been withheld are reported at the correct label.
The labels are:
- W1 – Total salary, wages and other payments
- W2 – Amounts withheld from salaries or wages and other payments shown at W1
- W4 – Amounts withheld where no ABN is quoted
- W3 – Other amounts withheld (excluding any amount shown at W2 or W4)
- W5 – Total amounts withheld (W2 + W4 + W3).
W1 – Total salary, wages and other payments
Include at W1 total gross payments from which you are usually required to withhold amounts. These payments include:
- salary, wages, allowances and leave loading paid to employees (including those subsidised by JobKeeper payments)
- director fees
- salary and allowances paid to office holders (including members of parliament, statutory office holders, defence force members and police officers)
- payments made by a labour hire firm to labour hire workers under a labour hire arrangement
- employment termination payments
- payment for unused annual or long service leave
- payments to religious practitioners
- superannuation (super) income stream
- super lump sum
- Commonwealth education and training payments.
- attributed personal services income.
Include all payments subject to withholding, even if you weren't required to withhold any amount. For example, if you pay an employee $80 per week, and they claim the tax-free threshold, there is generally no obligation to withhold as long as they have previously provided their tax file number. However, you still need to report the total payment at W1.
Do not include:
- amounts subject to salary sacrifice arrangements
- super contributions
- departing Australia superannuation payments
- payments from which you withheld an amount because an ABN was not quoted (see W4)
- an investment distribution from which you withheld an amount for non-quotation of a tax file number (TFN)
- interest, dividends or royalty payments from which you withheld an amount for a payment to a foreign resident
- payments to foreign residents for entertainment, sports, construction and casino gaming junket activities.
If you did not make any payments, leave the boxes blank.
W2 – Amounts withheld from salaries or wages and other payments shown at W1
Include at W2 the total amount you withheld from salaries, wages and other payments shown at W1. If you didn't withhold any amounts, leave the box blank.
This is the main type of withholding. If you have no other withholding obligations, go to W5.
W4 – Amounts withheld where no ABN is quoted
Where you make payments to suppliers who do not quote their ABN to you, you must withhold 47% (from 1 July 2017) of the invoice amount and pay this to us. Not quoting their ABN means that there was no ABN on the invoice and the supplier did not provide it to you in any other way.
Include at W4 the total amount you withheld from payments to suppliers who did not quote their ABN to you. If you have nothing to report, leave W4 blank.
W3 – Other amounts withheld (excluding any amount shown at W2 or W4)
W3 covers other types of withholding. Include the total amount you withheld from:
- interest, dividends, unit trust or other investment distributions you made, where the person you are paying has not filled in a TFN declaration form or otherwise provided you with a TFN (includes a foreign resident)
- interest, dividends or royalty payments you made to a foreign resident
- any departing Australia superannuation payments you made
- any payments you made to foreign residents, for
- entertainment and sport activities
- construction and related activities
- arranging casino gaming junket activities.
If you have nothing to report, leave W3 blank.
W5 – Total amounts withheld (W2 + W4 + W3)
Include at W5 the total of W2 + W4 + W3.
Do not include W1 in your W5 total.
Copy the total at W5 to 4 in the 'Summary' section of your activity statement. If your activity statement only asks you to report PAYG withholding, you will not have a summary section. Your total withholding will be reported at 9 in the 'Payment or refund' section of your activity statement.
Large withholders
You are a large withholder if you either:
- have withheld amounts totalling more than $1 million in a previous income year
- are part of a company group which has withheld more than $1 million in a past income year.
If you are a large withholder, you only need to complete W1 on your activity statement. Do not complete W2, W3, W4, W5 or 4 in the 'Summary' section. Large withholders must pay the amounts they withhold to us electronically.
If you report through Single Touch Payroll, you no longer need to report amounts at W1 on your activity statements.
Checklist
- Have you:
- filled in the PAYG instalment boxes that apply to you
- checked your calculations
- copied amounts correctly between boxes?
- Do you need to:
- complete any other sections that apply to you and copy the totals to the summary section
- calculate whether you must make a payment or if you're entitled to a refund
- complete the payment or refund details
- contact us to update your address?
- Make sure you:
- sign and date your activity statement
- lodge your original activity statement by the due date
- pay any amounts you owe by the due date
- keep the right records.