The ATO reviews PAYG withholding cycles annually to ensure each employer’s reporting and payment frequency reflects their actual withholding volume. In April 2026, the ATO is contacting affected employers by letter to advise them of changes effective from 1 July 2026.
How the Cycle Works
Your PAYG withholding cycle determines how often you must report and remit withheld amounts to the ATO. The three tiers are:
| Small withholder | Annual withholding under $25,000 — quarterly reporting and payment |
| Medium withholder | Annual withholding $25,000 to $1 million — monthly reporting and payment |
| Large withholder | Annual withholding over $1 million — payment within 6–8 days of the withholding event (e.g. payday) |
Who Will Be Affected?
Your cycle will change if your annual withholding across all branches has increased past a threshold. You will receive written notice from the ATO during April 2026 if a change applies.
Large Withholder Obligations
If your business becomes a large withholder, you will receive a unique Payment Reference Number (PRN) to use when making electronic payments. The withheld amounts you pay using this PRN must match what you’ve reported via Single Touch Payroll (STP). You will not need to report PAYG withholding separately on your activity statements if you report through STP.
What You Need to Do
- Watch for an ATO letter arriving in April 2026.
- Update your payroll software before 1 July 2026 to align with the new reporting and payment due dates.
- If your withholding will drop below the relevant threshold in 2026–27, you can request to remain on a lower cycle by submitting the ATO’s form within 21 days of the letter’s issue date.
Pace Tip: Don’t wait until June to action this. Payroll software changes can take time to test and implement. If you receive a letter, contact your Pace adviser promptly to assess whether to accept the new cycle or apply to stay on your existing one.
