02/04/2020

This morning, we noted that the ATO was allowing some large PAYG withholding businesses to defer their payment of PAYG withholding tax deducted from employee salaries and wages.  We also noted that the ATO was still working through its requirements.

This evening, the ATO clarified its official position going forward.  It will only consider permitting the deferral of PAYG withholding, GST and excise by large withholders (a large withholder is a business that withheld, or is part of a group that withheld, more than $1 million in tax last financial year) where there is a genuine risk of the business becoming insolvent and it has access to no other sources of funds.

Applicants must submit information to the ATO, which will be considered by a panel of senior executive officers of the ATO.

The ATO’s official position is set out below:

The ATO have taken a position not to exercise the discretion to defer the [PAYG withholding] PAYGW, GST and Excise obligations of large withholders, except in circumstances where an insolvency event is imminent, and the large withholder can demonstrate that they don’t have access to other sources of funding (e.g. loan facilities, equity contributions from new or existing shareholders, realisation of liquid assets); and the granting of a deferral would result in the large withholder remaining a going concern. We are also mindful of the expectations of employees from whose salaries tax has been withheld; and the consequences for the Directors of the large withholders in the event that the deferred PAYGW liabilities were subsequently not paid.

… Insofar as it relates to PAYGW, GST and Excise however we intend to hold a strict line on the granting of payment deferrals.

Large withholders who believe that they satisfy the criteria above should contact their ATO client service team in the first instance (taxpayers in the Top 100 public and international groups and Top 500 private wealth clients will have such client service teams).  To the extent that they do not have a dedicated ATO client service team, they should contact the Large Market Services Team on 1300 728 060, (02) 9685 8735 or e-mail at LargeServiceTeam@ato.gov.au and state their intention to seek a deferral of their PAYGW obligations.

The comments above are only in respect of large withholders.  We note the other measures that are available for all businesses and we encourage all businesses to seek out any help they need from the ATO, whether it is publicly stated or not.

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