Business taxpayers can no longer claim deductions for payments to workers if they have not met their Pay As You Go (PAYG) withholding obligations.
This applies to income tax returns lodged for the 2020 income year onwards.
If PAYG withholding rules require an amount to be withheld, a business must:
withhold the amount from the payment before they pay their worker
report that amount to the ATO.
The deduction will not be lost however if you withhold:
an incorrect amount by mistake (this needs to be rectified though)
the correct amount but make a mistake when reporting (this should also be rectified)
The deduction will be lost however, if no amount is withheld or reported to the ATO, unless this is voluntarily disclosed to the ATO before they examine your affairs.
Message is clear – do the right thing and comply with the requirements of the PAYG withholding system.
This is part of the government’s response to recommendations from the Black Economy Taskforce with the aim to level the playing field for honest businesses doing the right thing by their workers.
If you require further information on this measure, or anything else, please contact us on 02 9899 4730 or via www.ias-ca.com.au