Employers - Changes to deductions for non-compliant payments to workers

From 1 July 2019 the rules for claiming deductions for payments to workers are changing. 


Deductions can only be claimed for payments made to workers where the employer has 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 payment before you pay the worker
  • report that amount to the ATO


The deduction won't be lost if the following is withheld:

  • An incorrect amount by mistake – to minimise any penalties the mistake can be corrected by lodging a voluntary disclosure in the approved form from the ATO.
  • The correct amount but make a mistake when reporting


The deduction will only be lost if there is a withholding or reporting requirement and no amount is withheld or reported to the ATO unless a voluntary disclosure in the approved form is made before the ATO has begun an examination of your affairs.


The change is part of the government response to recommendations from the Black Economy Taskforce.


From the ATO website:  changes to deductions for non compliant payments to workers.