The ATO is notifying taxpayers that their pay as you go (PAYG) withholding cycle may change from 1 July 2025. 

Clients with annual withholding amounts between $25,000 and $1 million (medium withholder status) are required to report on activity statements and pay monthly.

Client with annual withholding amounts more than $1 million (large withholder status) are required to pay electronically within 6–8 days from the day they withheld the relevant amount, such as when they pay staff.  The ATO will provide a new Payment Reference Number (PRN) ending in 70 to quote when paying on the set payment days. 

If a client’s withholding status is changing, it’s important that changes are made to payroll software before 1 July 2025 to align the withholding reporting and payments with the new due dates.

Clients can request to stay on their existing cycle if they estimate the 2025–26 PAYG withholding amount will be less than the relevant threshold.  To do this, you need to send the ATO a Request to remain on a lower withholding cycle form within 21 days from the issue date of their letter, providing reasons and outlining changes in circumstances and the estimated amount of withholding in 2025–26.