Did you know that certain non-compliant payments made to workers are no longer tax deductible starting 1 July 2019?
As a business owner, you will need to make sure that all payments made to employees & contractors are compliant with the PAYG (pay as you go) withholding and reporting obligations.
If the payment is not compliant then you will not be able to claim the expense as a tax deduction.
What does it mean to be compliant?
If the PAYG withholding rules require you to withhold an amount from a payment to your employee or contractor, then you must withhold the correct amount and pay the balance to the employee or contractor.
You will then need to report and pay the withheld amount to the ATO when you lodge your Activity Statements.
If you make a mistake in withholding the wrong amount, you won’t lose your deduction but you must rectify this by revising your Activity Statement as soon as you find out.
What do you need to withhold?
You will first need to determine whether your workers are employees or contractors.
The following ATO website link explains in great detail how to make the decision as well as the type of payments you need to withhold from: Payments you need to withhold from.
If they are contractors, then the following link will advise when and how much to withhold: Contractor – checklist.
Check your records today and keep this in mind the next time you make a payment to your workers, whether it be for employees or contractors.
Be compliant and don’t miss out on a tax deduction.
Contact CrossCorp today if you have questions about your PAYG withholding and reporting obligations.
