PAYG
Payment summary
A payment summary is a statement of the payments an employer or payer made to a worker during the year and the tax withheld, used by the worker to prepare their tax return.
A payment summary is an annual statement showing what you were paid by an employer or other payer and how much tax was withheld. It used to be given to every employee after 30 June, and workers used it to complete their tax return. For most employees today, it has been replaced by the income statement, which is created through Single Touch Payroll and shows on the ATO's systems.
Payment summaries still exist for some types of payment that are not reported through Single Touch Payroll. Examples include certain payments made under voluntary agreements, payments where a worker did not quote an ABN, and some other payments that are subject to withholding. In these cases the payer prepares a payment summary or a payment summary annual report to send to the ATO and to the payee.
If you are a worker, the key point is to use the right information when you lodge. Do not rely on an old paper payment summary if the ATO's records show an income statement. Check your income through the ATO's online services, and wait until your employer has finalised the information before lodging, or your return may need to be amended. If something looks wrong, ask the payer to correct it.
If you are a payer, check whether your payments are covered by Single Touch Payroll or whether a separate payment summary report is required. Making incorrect reports can lead to penalties and to inaccurate tax returns for your workers. Payment summaries should show the gross amount paid, tax withheld and other required details, and be given within the time set by the ATO.
A common misunderstanding is thinking that payment summaries and income statements are two different sets of earnings. They record the same type of information and serve the same purpose, but through different systems. Another mistake is losing the details when switching jobs. If you cannot get information from a former employer, the ATO may be able to help you.
Keep copies of any payment summaries you issue or receive for five years. This is general information only, so confirm what applies to you with the ATO or a registered tax professional.
Worked example
Sue worked for a retailer from July to June and earned $52,000 gross with $7,800 tax withheld. The retailer reports through Single Touch Payroll, so Sue sees an income statement in her ATO online account showing these figures. She also did a short job paid under a voluntary agreement, for which the payer gave her a payment summary showing $3,000 and $300 withheld. She includes both in her return.
Practical tips
- Check the ATO's records for income statements before lodging, and wait until your employer finalises them.
- If you pay workers outside Single Touch Payroll, confirm whether you need to issue a payment summary.
- Keep any payment summaries you receive with your tax records.