New laws passed by parliament last month directly target the behaviour of taxpayers that don’t meet their obligations.

From 1 July 2019, if taxpayers do not meet their PAYG withholding tax obligations for the following payments, they will not be able to claim a tax deduction:

  • salary, wages, commissions, bonuses or allowances to an employee;
  • directors’ fees;
  • labour hire arrangements; or
  • services where the supplier does not provide their ABN.

Exception: Where a mistake is made and voluntarily corrected.

For example, if you made payments to a contractor but then later realised that they should have been paid as an employee and no PAYG was withheld. In these circumstances, a deduction may still be available if you voluntarily correct the problem.  Penalties may still apply, however.