Important Changes to PAYG Withholding Cycle Reminder from ATO

The Australian Taxation Office (ATO) is reminding business owners to be aware of potential changes to their pay-as-you-go (PAYG) withholding cycle, as reviews and adjustments will be made throughout the month of April.

According to the ATO, each year they review PAYG withholding cycles to determine if changes are necessary based on a business’s annual withholding amount. If a business’s withholding cycle is set to change, they will receive notification in April, and the new reporting and payment obligations will take effect from 1 July 2025.

Business owners are advised to make necessary adjustments to their payroll software before the deadline to align with the new withholding reporting and payment dates. Medium withholder status businesses, with an annual withholding amount between $25,000 and $1 million, will be required to report on their activity statement and pay monthly.

Businesses with large withholder status, with an annual withholding amount exceeding $1 million, will need to pay electronically within six to eight days from the withholding date. They will also receive a new payment reference number (PRN) to use for payments on specific days.

It is crucial for businesses to ensure that the withholding amounts paid using the new PRN match the amounts reported via single touch payroll. Additionally, businesses can request to remain on their existing cycle if they anticipate their 2025-26 PAYG withholding amount will be below the threshold.

To make this request, businesses must submit a form within 21 days of receiving the notification letter, providing details of the change in circumstances and the estimated withholding amount for the upcoming year.

This reminder from the ATO serves as a proactive measure for business owners to stay informed and compliant with the upcoming changes to the PAYG withholding cycle.