PAYG withholding is how your employer deducts tax from your salary before you receive it. Understanding it helps you plan your finances.
How PAYG works
- Employer withholds tax from each pay
- Amount based on your tax bracket and TFN declaration
- Withheld tax goes directly to ATO
Your TFN declaration
When you start work, you complete a TFN declaration telling your employer your tax situation. Key questions:
- Tax-free threshold claim
- HELP/TSL debt
- Superannuation fund details
End of year
Lodge a tax return to reconcile your actual tax liability with what was withheld.