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ATO Reminds Taxpayers of Requirements for Deduction of Payments to Workers — Orbitax Tax News & Alerts

The Australian Taxation Office (ATO) has issued a reminder to taxpayers of the compliance obligations from 1 July 2019 to claim deductions for payments to workers.

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Get PAYG withholding obligations right to claim a deduction

You can no longer claim deductions for payments to workers if you haven't met your PAYG withholding obligations.

These new rules took effect from 1 July 2019 and apply to income tax returns lodged for the 2020 income year onwards. They are part of the government’s response to recommendations from the Black Economy Taskforce.

In order to claim a deduction, you need to:

  • withhold the required amount (if applicable) before you pay your worker
  • report that amount to us.

If you make a mistake and withhold or report an incorrect amount, you won't lose your deduction. However you still need to correct your mistake as soon as possible to minimise penalties.

If you're having trouble contact us as soon as possible and we'll work with you to find a solution.

Next step:

If you need help, phone us on 13 11 42 to discuss your options.

See also:

Removing tax deductibility of non-compliant payments

Voluntary disclosures – approved form

PAYG withholding – correcting mistakes