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ABN Withholding

How do I manage ABN withholding tax?

You may be paying a supplier who hasn't given you a valid ABN. In this case the ATO expects you to withhold 49% of the payment and remit it to the ATO via the BAS/IAS. To do this you can enter a Purchase transaction as per the following example for $1,000 but no ABN has been supplied:

  1. First go to Settings > Tax Codes.
  2. Choose Show all "inactive" codes.
  3. Click to open the W4 - Withheld Payment (No ABN) tax code.
  4. Set this code to Active and tick the Visible on Purchases option.
  5. Enter a Purchase transaction with these lines:
    AccountTax CodeAmount
    Expense: Consulting Fees535
    Expense: Consulting FeesW4465
    Liability: ABN Withholding Tax Payable-465
  6. Later when you pay your BAS/IAS you will code the ABN withholding portion to the Liability: ABN Withholding Tax Payable account to clear it.