Compliance
Navigating PAYG Withholding Variations: What Businesses & Professionals Need to Know
Significant changes to PAYG withholding variation instruments means entities like companies, indigenous artists, religious practitioners — know what withholding, ABN quoting, and reporting requirements now apply.
By NomadicTax Research Team • 5-8 min read • April 17, 2026
## Overview of Recent PAYG Withholding Variation Instruments
In **early 2026**, several **Legislative Instruments (LIs)** have come into force or been updated to **reduce withholding obligations to nil** under certain conditions. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai)) Noteworthy are:
- **Payments to Indigenous Artists** who operate in certain remote “Zone A” areas and do not quote an **ABN**.
- **Insurance and compensation payments** where ABN is not quoted.
- **Certain payments to religious practitioners**, including removing requirement for non-institution payers to provide payment summaries.
- **Payments by company directors/office holders** where the amount is passed to another entity.
These LIs replace older instruments and respond to sunset-dated provisions as of 1 April 2026. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai))
## Who’s Affected & Practical Impacts
These changes matter particularly for:
- **Non-quoting ABN payees** in specific categories (artists, compensation recipients). Under previous law, payers withheld tax at default ABN‐withholding rates if no ABN was supplied. Under the new LIs, no withholding is required.
- **Religious practitioners**, especially when dealing with small organisations or individual payers who may not be religious institutions themselves. They no longer need to issue payment summaries for some payments.
- **Directors/office holders** passing payments to their entities, simplifying administrative burden.
## Compliance Advice & Example
Take these steps now:
- **Review your classification**: Are you making payments in any of the changed categories? If so, determine whether you need to withhold, or whether the variation exempts you.
- **Update contracts and policies**: Ensure payment agreements and contractor contracts reference the requirement (or exemption) for ABN quoting.
- **Audit payroll and reporting systems**: Your payroll software must be configured for accurate STP reporting, especially for religious practitioners.
### Example
A regional Indigenous artist without an ABN performs work in Zone A. Under previous rules, the payer withheld **47%** or default ABN withholding rate. Now, under the legislative instrument, withholding must be **nil**. However, the artist should still provide invoices, receipts, and ensure correct classification of revenue.
## Key Dates & Deadlines
- The varied LIs take effect **March 2026** and have replaced earlier instruments that expired or sunsetted 1 April 2026. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai))
- Entities should ensure STP reporting and payroll systems comply with **ongoing obligations**. Non-compliance could result in penalties.
## Actionable Takeaways
- If you're a payer, identify all payment categories in your business and verify whether variations apply.
- If you're a recipient (artist, religious practitioner, etc.), keep ABN records clear, and monitor any eligibility for offsets or reporting obligations.
- Seek professional advice if you are unsure whether your earnings or payments fall under a variation.
These LIs streamline withholding for certain payees—but understanding which rules apply to you can help avoid unnecessary withholding or compliance risk.