WITHHOLDING FROM SUPPLIER PAYMENTS - THE PROCEDURES
25 July 2005
The following paragraphs outline the process that needs to be followed where Council has withheld an amount from a supplier payment.
When you pay the remaining 51.5 per cent, you should give the supplier an original and a copy of a payment summary. The supplier will need to attach the copy of the payment summary to their tax return. You will be able to get payment summary forms later by phoning the ATO on 13 28 66. If you want to create your own, it must contain:
your business name and ABN or withholding number
the name of the supplier and address if you have it
the total amount invoiced
the amount you withheld
the date you paid and withheld, and
your signature or that of a person authorised to sign for the business.
Keep a copy of the payment summary to help prepare your annual report for PAYG withholding where no ABN is quoted.
Keep records of transactions in which you withheld 48.5 per cent separate from other payment records, because you cannot claim any GST input tax credits for these payments if GST was included in the price.
You pay the amount you withheld to the Tax Office with your activity statement payments.
Activity statements have a section on PAYG withholding. For the period that the statement covers, you add up all the amounts that you have withheld from suppliers that did not quote their ABNs and record the total in the space provided (box W4). Detailed instructions are in ATO publications Business activity statement instructions and Instalment activity statement instructions. You will receive the appropriate copy with your activity statement package.
If you have not withheld any amounts for 'No ABN' suppliers for the period, you should write '00' in the W4 box. When you complete the activity statement, you will have a net amount to pay uthe ATO to receive as a refund. 'No ABN' amounts withheld will be included in this net amount.
You can lodge your activity statement by mail or electronically.
At year end:
You need to complete your annual report for PAYG withholding when you have withheld amounts from 'No ABN' suppliers. The annual report has to be sent to the ATO by 31 October.
The annual report will contain details for the financial year of all the amounts you have withheld where no ABN was quoted and details of all the Payment summaries you have issued. A sample copy of the PAYG withholding where ABN not quoted – annual report (NAT 3448) is available from the ATO website. To order a copy of the report, use the ATOs automated ordering service on 13 72 26 (make sure you have your ABN or withholder payer number with you when calling) or contact the ATO on 13 28 66. You will be able to lodge your annual report by mail, electronically or through your tax agent. The report is separate from your other annual withholding report which is due on 14 August.