Changes to deductions for payments to workers

The rules for claiming deductions for payments to workers are changing. From 1 July 2019, you can only claim deductions for payments made to your workers where you have met the pay as you go (PAYG) withholding obligation for that payment.

Where the PAYG withholding rules require an amount to be withheld, you must:

• withhold the amount from that payment before you pay your worker
• report that amount to the ATO.

You won’t lose your deduction if you withhold:

• an incorrect amount by mistake – to minimise any penalties you can correct your mistake by making a voluntary disclosure in the approved form.
• the correct amount but made a mistake when reporting – correct your mistake as soon as possible.

You will only lose your deduction if there is a withholding or reporting requirement and no amount is withheld or reported to the ATO. However, you won’t lose your deduction if you make a voluntary disclosure in the approved form before the ATO tell you we have begun an examination of your affairs.

This change is part of the Government’s response to recommendations from the Black Economy Taskforce.