Changes to PAYG Withholding - What Your Business Needs to Know

Effective 1 July 2025, some businesses may see changes to their withholding, reporting and payment obligations.

If your business is affected, the ATO will send you a notice advising you about the changes and what you need to do.

What are the changes?

Each year the ATO reviews the PAYG withholding cycles to make sure that they align with your business’ annual withholding amount.

The new withholding categories are:

·         Small business withholders: Withhold $25,000 or less annually, report quarterly

·         Medium business withholders: Withhold $25,001 to $1 million annually, report monthly

·         Large business withholders: Withhold over $1 million annually, must pay electronically within 6–8 days of the withholding event

Large business withholders will be assigned a new Payment Reference Number (PRN) to ensure accurate matching of withholding amounts to the reported figures.

What do you need to do?

If your withholding status is changing:

·         Update your payroll software before 1 July 2025 to reflect the new cycle

·         Look out for a notification from the ATO in April so you have time to prepare

·         If your estimated withholding for 2025–26 falls below the threshold for your new category, you may request to remain on your current cycle

To request to remain on a lower withholding cycle, you need to send a completed Request to review ATO initiated PAYG withholding cycle change form within 21 days from the date that of the letter you receive from the ATO.

For more information, you can visit the ATO website at ato.gov.au/cyclechange

If you have any questions on the changes to the PAYGW and how it may impact your business, please contact Steve Marsten on (07) 3876-6211