Understanding Pay-As-You-Go (PAYG) Tax in Australia
Understanding Pay-As-You-Go (PAYG) Tax in Australia If you’ve ever looked at your payslip and wondered why your take-home pay is lower than your gross salary, the answer lies in PAYG—Pay-As-You-Go tax. This is the system the Australian Taxation Office (ATO) uses to collect income tax from employees throughout the year. In this guide, we’ll break down how PAYG works, what it means for you, and how to stay on top of it. 🧾 What is PAYG Tax? PAYG is a system where your employer withholds a portion of your salary and sends it directly to the ATO as income tax on your behalf. Instead of paying tax in a lump sum at the end of the year, you pay gradually with each pay cycle. 📉 How Much is Withheld? The amount withheld depends on: Your total salary or wages Whether you’ve claimed the tax-free threshold Any additional deductions or income streams Tax withholding tables are used by payroll software to ensure accuracy based on current ATO rates. 📆 How Often is PAYG With...