Non-profit organisations who want to withhold a payment from a supplier should complete a pay as you go (PAYG) payment summary where an ABN (Australian business number) is not quoted. This should be given to the supplier as it can have several tax implications.
Before withholding from a payment, the organisation must be registered for PAYG withholding.
An organisation that wants to withhold from employee wages must also be registered for PAYG withholding as well. The organisation may have been registered when it applied for an ABN but if not, it can register at any time. For those who are not registered, you have to contact the tax office.
A supplier may not provide its ABN if they are not carrying on an enterprise in Australia, an individual under 18 years and the payment does not exceed $350 per week, the payment does not exceed $75 excluding any GST, the supply that the payment relates to is wholly input taxed, an individual and a written statement is provided to the payer to the effect that the supply is either made in the course of furtherance of an activity done as a private recreational pursuit or hobby or wholly of a private or domestic nature.
A supplier may also be exempt from ABN if they are an individual or a partnership without a reasonable expectation of profit or gain, not entitled to an ABN because they are not carrying on an enterprise in Australia and the whole of the payment is exempt income.
In case a supplier does not quote their ABN and they do not fall under the aforementioned exemptions, the organisation should withhold 47% of the total payment (from 1 July 2017).
In case a supplier doesn’t have an ABN, the organisation may delay payment until the supplier has provided their ABN. This is referred to as no ABN withholding. The payment delay will be at the hands of the organization and the supplier.
The organisation has to fully pay the supplier if there is an understanding that the ABN will be quoted soon.
If it fully pays, the organisation may be penalised for the amount it did not withhold. The organisation has to add all the amounts it has withheld for PAYG withholding purposes and send the total to the tax office with its next activity statement.
For more information about taxes in Australia, contact a Specialist to discuss your particular circumstances.
Chan & Naylor Group has national offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and Bankstown, Parramatta, Pymble, North Sydney, and Sydney in New South Wales.