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BAS/IAS: PAYG Withholding (W)

Complete these labels if you have withheld tax from payments to others. The Taxation Law classifies withholders as small, medium or large:

  • Small withholders are those who withheld $25000 or less in the previous financial year. Small withholders must lodge and pay quarterly.

  • Medium withholders are those who withheld more than $25000 but less than $1m in previous financial years. Medium withholders must lodge and pay monthly.

  • Large withholders are those who withheld more than $1 million in a previous year. If you are a large withholder, you must only complete W1 on the activity statement. Do NOT complete W2, W3, W4, W5 or 4 in the Summary Section.

Label W1—Total of Salary, Wages and Other Payments

Include at W1 total gross payments from which you are usually required to withhold amounts. These payments could include:

  • salary, wages, allowances and leave loading paid to employees

  • director fees

  • salary and allowances paid to office holders (including Members of Parliament, statutory office holders, defence force members and police officers)

  • payments made by a labour hire firm to labour hire workers under a labour hire arrangement

  • payments to religious practitioners, and

  • Commonwealth education and training payments

Include all payments subject to withholding, even if you weren’t required to withhold any amount. For example, if you pay an employee $80 per week, and they claim the tax-free threshold, there is generally no obligation to withhold as long as they have previously provided their tax file number, but you still need to report the total payment at W1.

Do not include:

  • Superannuation contributions

  • Departing Australia superannuation payments

  • Payments from which you withheld an amount because an ABN was not quoted (refer to LabelW4—AmountswithheldwherenoABNisquoted)

  • An investment distribution from which you withheld an amount for non-quotation of a tax file number

  • Interest, dividends or royalty payments from which you withheld an amount for a payment to a non-resident, or

  • Payments to foreign residents for entertainment, sports, construction and casino gaming junket activities.

Label W2—Amounts Withheld from Amounts Payments Shown at W1

Label W4—Amounts withheld where no ABN is quoted

Small and medium withholdersWhere a business is supplied with goods or services and an ABN is not provided on the invoice or other document relating to the supply, an amount must be withheld from the payment of that invoice at the top marginal rate, plus the Medicare levy. This amount must be paid to the ATO.

Include at W4 the total amount you withheld from payments to suppliers who did not quote their ABN to you. If there is nothing to report, leave W4 blank.

Label W3—Other amounts withheld (excluding any amount shown at W2 or W4)

W3—Enter the amount of withholding, if any, withheld from:

  • TFN withheld amount where the beneficiary did not provide the trustees of a closely held trust with a TFN,

  • interest, dividend or unit trust or other investment distributions where the investors did not provide you (the investment body) with a TFN declaration form or otherwise provide a TFN (includes a non-resident),

  • interest, dividends or royalty payments made to a non-resident,

  • any departing Australian superannuation payments,

  • any payments made to foreign residents for:

    • entertainment and sport activities,

    • construction and related activities, or

    • arranging casino gaming junket activities.

If there is nothing to report, leave W3 blank.

A small withholder must notify and pay amounts withheld from investment distributions during a quarter by the 21st day after the end of that quarter, that is, 21 October, 21 January, 21 April and 21 July. A medium withholder must notify and pay amounts withheld during a month by the 21st day after the end of that month.

Label W5—Total amounts withheld W2 + W3 + W4

This amount is calculated by the system and is the sum of labels W2 + W4 + W3.

The amount at W5 will be defaulted to the Summary section, item 4, of the activity statement.

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