New from the Tax Office

Non-compliant payments to workers no longer tax deductible

This from the tax office:

” Let your business clients know they can no longer claim deductions for payments to workers if they have not met their pay as you go (PAYG) withholding obligations. This applies to income tax returns lodged for the 2020 income year onwards.

Remind your clients if PAYG withholding rules require an amount to be withheld, they must:

  • withhold the amount from the payment before they pay their worker
  • report that amount to us.

Your client will not lose their deduction if they withhold:

  • an incorrect amount by mistake – to minimise penalties you or your client can correct the mistake by lodging a voluntary disclosure in the approved form
  • the correct amount but make a mistake when reporting – you or your client should correct the mistake as soon as possible.

Your client will only lose their deduction if no amount is withheld or reported to us, unless they voluntarily disclose this before we examine their affairs.

This measure aims to level the playing field for honest businesses doing the right thing by their workers. It is part of the government’s response to recommendations from the Black Economy Taskforce.