PAYG withholding explained

PAYG is not a separate tax

PAYG withholding is a collection method for income tax. Your employer uses ATO withholding schedules and the information you provide on your Tax file number declaration to estimate the tax to withhold. Your final position is worked out when you lodge a tax return, if you need to lodge one.

Why withholding can change

A change in pay frequency, overtime, a bonus, a new tax-file-number declaration, a second job or payroll corrections can all affect the amount withheld. The figure can also differ from a simple annual salary estimate because payroll works from individual pay periods.

Where to check it

Look for the tax or PAYG withholding line on your payslip, then compare it with your year-to-date income and tax. For official detail, see the ATO's PAYG withholding guidance.