When does the 47% PAYG no-ABN withholding apply?

Under s.12-190 of Schedule 1 to the Taxation Administration Act 1953, a business making a payment to a supplier for goods or services as part of an enterprise must withhold 47% from the payment if the supplier has not quoted an Australian Business Number (ABN). The rate is the top marginal personal income-tax rate. The Commissioner's instructions require the withheld amount to be remitted with your BAS at label W4.

How does HelloBooks know whether the supplier has a valid ABN?

HelloBooks validates the ABN format (11 digits, mod-89 weighted checksum) the moment you save it on the vendor profile, and calls the public ABR (Australian Business Register) lookup API to confirm the ABN is active and resolve it to the entity name + GST registration status. The result is cached on the vendor record so subsequent bills do not re-lookup.

What exemptions are available under s.12-190(4)?

Withholding is not required where (a) the payment is AUD 75 or less (excluding GST), (b) the supplier is wholly an employee (in which case PAYG W1/W2 payroll withholding applies), (c) the supplier is engaged in a private recreational pursuit or hobby, (d) the supplier is an individual under 18 paid up to AUD 350/week, or (e) the supplier has provided a written "Statement by a supplier" confirming they are not required to quote an ABN. HelloBooks captures the exemption + reason on the vendor record and retains the audit trail per s.12-190(5).

Where does the 47% withholding post in my ledger?

HelloBooks credits the withheld amount to 2321 PAYG Withholding No-ABN Payable on the AU chart of accounts. This account is separate from 2320 PAYG Withholding Payable (the BAS W1/W2 payroll account) so the W4 number stays cleanly separable for ATO reporting. Both accounts are seeded automatically when you onboard an AU entity.

How does this show up on the BAS and TPAR?

The withholding lands on the BAS at label W4 (Amounts withheld where no ABN quoted). It also surfaces on the TPAR contractor row alongside the gross payment and GST, so the W4 total on the BAS, the contractor-level total on the TPAR and the period movement on 2321 all reconcile to the same source bills.

Can I override the 47% rate for a voluntary withholding agreement?

Yes. Under s.12-55 a payer and supplier can enter a voluntary agreement to withhold at an agreed rate. HelloBooks stores the PAYG section ('PAYG-VOLUNTARY') and rate on the bill, and posts the credit to 2320 PAYG Withholding Payable (BAS W2) — separate from the W4 no-ABN account.

Does the withholding accrue per contractor for the year?

Yes. HelloBooks maintains a VendorPaygLedger row per (Vendor, AU financial year, PAYG section) that cumulates gross payments, withheld amounts and transaction counts. The ledger is idempotent by Bill ID — a retry of the same bill save never double-counts. The numbers cross-check the TPAR aggregation from an independent angle, useful for audit reconciliation.

Is the lookup of an ABN free? Do I need API keys?

The ABR (abr.business.gov.au) JSON lookup is a free public ATO service. HelloBooks ships with an ABR_API_GUID configured at the platform level, so individual entities do not need their own key — the lookup is built in.

Australia · PAYG no-ABN

PAYG no-ABN withholding (47%) — handled automatically

Under s.12-190 TAA Sched 1, Australian businesses must withhold 47% from any payment to a supplier that does not quote an ABN. HelloBooks validates the ABN against the ABR (abr.business.gov.au), warns you the moment a vendor lacks a valid ABN, supports the five s.12-190(4) exemptions, and posts the withholding to 2321 PAYG Withholding No-ABN Payable (BAS W4) on every bill.

Last updated: 2026-06-19Last reviewed against ATO docs: 2026-06-19

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Why 47%

The s.12-190 rule, in plain English

When you pay a supplier for goods or services as part of carrying on an enterprise, and they do not quote a valid ABN, the law requires you to withhold the top marginal personal income-tax rate (47% including Medicare levy from 2024-25) and remit it to the ATO via your BAS.

The rule exists to push contractors into the GST/ABN system. If you skip the withholding, the ATO can recover the unwithheld amount from you plus penalties — so the safest pattern is to capture every supplier's ABN at vendor creation, or flag a recognised exemption.

Source: ATO — Payments to suppliers who don't quote an ABN

What happens if you forget?

Pay the supplier the full gross amount without withholding and you become personally liable for the 47% to the ATO. HelloBooks defends against this with a rose warning card on every AU vendor without a valid ABN — the warning describes exactly what will happen at bill time, before any bill is created.

s.12-190(4) exemptions

Five recognised exemptions

Flag any of these on the vendor profile and HelloBooks skips the 47%. ATO requires you to retain the supporting evidence per s.12-190(5) — the exemption reason on the vendor record is your audit trail.

Sub-AUD 75 supply

Payment ≤ AUD 75 (excl. GST) for the supply.

Supplier is wholly an employee

Employee payments belong on the BAS W1/W2 PAYG-withholding path, not W4.

Hobby / private recreation

Supplier is engaged in a private recreational pursuit or hobby — not carrying on an enterprise.

Under 18, ≤ AUD 350/week

Supplier is an individual under 18 paid up to AUD 350 a week.

Written "Statement by a supplier"

Supplier has provided a written statement that they are not required to quote an ABN.

Step by step

How it works in HelloBooks

Enter the supplier ABN

On the vendor profile, paste or type the 11-digit ABN. HelloBooks validates the mod-89 checksum, calls the public ABR (abr.business.gov.au) lookup, and pre-fills the trading name, entity type, GST registration status, and address.

No ABN? See the warning immediately

If the supplier has no valid ABN on file, a rose warning card appears on the vendor form citing s.12-190 TAA Sched 1. You see — before any bill is entered — that bills from this vendor will be withheld at 47% and posted to 2321 PAYG Withholding No-ABN Payable (BAS W4).

Flag an s.12-190(4) exemption if it applies

A reason picker on the warning card lets you flag the supplier as exempt (sub-AUD 75, employee, hobbyist, under-18, or written statement). HelloBooks stores the exemption + reason on Vendor.TaxInfo and skips the 47% withholding on every future bill — the ATO-required audit trail stays intact.

Bills auto-withhold + post the W4 credit

On every non-exempt bill, HelloBooks computes 47% of the gross, debits the expense at full, credits Accounts Payable at the net, and credits 2321 with the withholding. The figure also flows into the BAS W4 line and the contractor's TPAR row, so your annual numbers reconcile across BAS, TPAR and ledger.

FAQs

Common questions about PAYG no-ABN

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