The PAYG withholding cycle determines reporting and payment frequency to the ATO. The ATO will write to tax agents and employers in April to announce if your PAYG withholding cycle needs to be upgraded. Your new withholding and payment cycle will depend on the amount you withheld under your Australian Business Number (ABN) in all branches in 2022-23:

  • Small withholders (under $25,000) inform and pay quarterly.
  • Medium withholders (above $25,000 up to $1 million) report and pay monthly, ensuring alignment with Single Touch Payroll (STP).
  • Large withholders (over $1 million) receive a new Payment Reference Number (PRN) for set payment dates and reconcile STP and paid amounts without reporting on activity

Changes to Your Withholding Reporting and Payment Cycle

You may have to make modifications to your payroll software prior to July 1 to match your withholding reporting payments with the new due dates. If your estimated PAYG withholding amount for 2024-25 will not exceed the relevant threshold, you can request to stay on your existing cycle.

Annual Review by the ATO

A review will be conducted by the ATO to check your withholding payments every financial year to check if your withholding cycle needs to be upgraded. The ATO will either write or email you to upgrade your withholding cycle if your annual withholding payments have been maximised. Your new withholder status (medium or large) will be used to determine your new withholding cycle. Before the due date of your first payment for the new financial year, the ATO will give you some time to change to the new payment cycle.

Objection is not allowed to this notice. However, if you do not agree with the ATO decision to change your PAYG withholding cycle, you can request to stay on your existing cycle in case you estimate that your withholding amount will remain within your withholding status threshold in future. You or your small business accountant need to send a request to the ATO within 21 days of receiving a letter or email from the ATO.

Cycle Change Because of Compliance Activity

Your PAYG withholding cycle may be changed by the ATO because of an audit or other compliance activity. The ATO will consider the matters mentioned below when making a determination:

  • the sum of amounts you may withhold in the next 12 months
  • the extent, if any, to which you receive or pay withholding payments that were received or made previously by another entity
  • any failure to satisfy tax obligations under the withholding rules

If the ATO thinks to upgrade your withholding cycle, the ATO will release a written notice to notify you about the changes and the date when they will come into effect.

Request to Remain within a Lower Withholding Cycle

The ATO may approve a request to remain within a lower withholding cycle if you satisfy any of these conditions. Don’t forget to attach an explanation to support your request. If this is not given, then it won’t be considered. You:

  • are engaged in seasonal work
  • only pay withholding for the part of the year
  • have income fluctuations due to uncertainty of contracts in certain fields
  • are impacted by a natural disaster.

if you are confused or not sure about these changes, please contact our office for more information.

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How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.


General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.