Losing a tax deduction for non-compliant payments to employees

Kelvin Smith
Sep 6, 2019
minute read

Don't lose a tax deduction for non-compliant payments to employees. Here’s what you need to know. 

Are you a business owner? Did you know that you are no longer able to claim a deduction for payments to your staff members if you have not complied with your PAYG Withholding obligations?

When does this apply?

This rule applies to all tax returns lodged for the 2020 year and onwards.

The PAYG rules stipulate the following

1.    You are required to withhold the tax amount from all payments before you pay your employee; and

2.    that you report that amount to the ATO in your Business Activity Statement (BAS).

Tax deductions will only be lost if you do not withhold the tax amount or do not report that amount to the ATO, that is unless you voluntarily disclose that information to the ATO before an audit.

These new obligations have been introduced by the ATO to ‘level the playing field’ for businesses that are doing the correct thing by their staff.

Next steps

Chat to us if you have any questions about these laws and how they may affect your business.

Article by
Kelvin Smith
As Director and co-founder of Here Business & Wealth, Kelvin works closely with individuals and business owners to provide the best possible guidance and advice relevant to their specific needs.


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