Removing tax deductibility of non-compliant payments
From 1 July 2019, you can only claim deductions for payments you make to your workers (employees or contractors) where you have complied with the pay as you go (PAYG) withholding and reporting obligations for that payment.
If the PAYG withholding rules require you to withhold an amount from a payment you make to a worker, you must:
- withhold the amount from the payment before you pay it
- report the amount to the ATO.
Any payments you make where you haven't withheld or reported the PAYG tax are called non-compliant payments. You won't be able to claim a deduction if you don't withhold any PAYG tax or report the PAYG tax to the ATO.
If you make a mistake and withhold or report an incorrect amount, you will not lose your deduction.
Visit the ATO's website
for more information about:
- Payments that must comply
- Non-cash benefits
- Correcting a mistake
- Failure to withhold or report
Alternatively, call the team at Flor-Hanly Accountants in Mackay on 07 4963 4800.