Tax Withholding
Tax withholding is when your employer automatically subtracts tax away from what they pay you and transfers it to the ATO. The point of this is partly:
- To prevent people from mismanaging their money and failing to make a big lump sum transfer to pay off their income tax.
- For the government to get regular income that they can spend throughout the year.
- Make it easier for taxpayers to get it right.
- Reduce tax evasion.