What is PAYG withholding?
Finance & accounting. A plain-English definition for Australian business owners.
PAYG withholding is the system under which a business withholds tax from payments it makes — most commonly employee wages — and remits it to the ATO, usually through the BAS.
Amounts withheld are calculated against the ATO's current tax tables and credited against each employee's eventual income tax. It is distinct from PAYG instalments, which are prepayments of the business's own expected income tax. A business must register before it first needs to withhold, and withheld amounts are never the business's money — treating them as working capital is a serious compliance failure.
In a connected back office this sits with the Finance hub, where Valont runs bookkeeping, managed payroll and bas & tax compliance for Australian SMEs as one team. The full definition set is on the glossary.
Talk to an Advisor
General information, not advice. For how this applies to your business, talk it through with a Trusted Advisor or start with the Business Health Check.