How PAYG withholding system and reporting connect
The kinds of payments you need to report are also payments that are part of the PAYG withholding system. This means you are required to withhold amounts from these payments and pay the amount you have withheld to us. In some cases, you may also need to pay tax to a foreign government or tax authority. You need to include these amounts.
PAYG withholding
You must report the amounts you withhold from payments you make to employees. You must include separate YTD amounts you have withheld from each income type (and for income types that require a country code, for each combination of income type and country code).
If you are reporting amounts you have withheld from payments you are reporting against the FEI income type, you must only report the residual amount withheld after the deduction of foreign tax paid. If you do not know the amount of foreign tax on or before each payday, you must report the full amount of PAYG withholding. When you know the amount of foreign tax you can correct your STP reporting so that you are reporting the residual amount.
Foreign tax paid
If you have paid amounts to an employee that you are reporting against the FEI income type, there are rules for reporting foreign employment income. One of these rules is that you must report the amount of foreign tax that you have paid or are required to pay to a foreign government or authority.
This amount must be included in your STP reporting during the same financial year as the payment is reported even if you do not actually pay the foreign tax until after the end of the Australian financial year.
The amount you report must be in Australian dollars. See how to convert foreign income into Australian dollars.
If you do not know the amount of foreign tax on or before each payday, then you can report zero or estimate the amount of foreign tax. If you do this, you must still include the correct foreign tax amount in your STP report when you finalise your reporting at the end of the financial year.
Find out about other components of your STP reporting.