ATO Services
PAYG Disputes
PAYG withholding disputes — often centred on whether workers are employees or contractors — can result in significant ATO assessments for unpaid withholding, superannuation guarantee charges, and associated penalties. A tax lawyer can review the classification and challenge incorrect ATO assessments.
⚠ PAYG assessments carry objection deadlines. Director Penalty Notices for unpaid PAYG withholding must be responded to within 21 days — act immediately.
Does This Sound Like You?
Common situations we help with.
The ATO says your contractors are employees
The ATO has determined that workers you engaged as contractors should have been treated as employees. This means years of PAYG withholding that should have been deducted and remitted — now assessed against your business, with penalties and GIC on top.
You've received a superannuation guarantee charge assessment
The ATO has assessed your business for superannuation guarantee charge (SGC) — either because workers were reclassified or because super contributions weren't paid on time. SGC assessments carry penalties and nominal interest and can quickly become very large.
You've received a Director Penalty Notice for PAYG or SG
As a company director, the ATO has issued a DPN making you personally liable for the company's unpaid PAYG withholding or superannuation guarantee shortfall. You have 21 days to respond — this deadline is strictly enforced and immediate legal advice is critical.
The ATO is auditing your worker arrangements
The ATO has notified your business of a PAYG or SG compliance review, requesting documents and information about your contractor and employee arrangements. You want legal representation to manage the audit, control the scope of the inquiry, and avoid an unfavourable outcome.
You're not sure if your contractor arrangements are compliant
You engage a number of workers on contractor arrangements and are uncertain whether they meet the current legal test following recent High Court decisions. You want to review your arrangements before the ATO does, and fix any problems proactively.
The PAYG instalment amount seems too high
The ATO has set your PAYG instalment amount at a level that doesn't reflect your current expected income. You want to vary the instalment or challenge the instalment income calculation the ATO has applied.
How It Works
Resolve your PAYG dispute with the right legal support.
Describe the PAYG issue and any ATO correspondence received. A tax lawyer will review the worker classification or assessment and advise on the best approach.
Submit Your RequestSubmit your request
Describe the PAYG dispute, the workers involved, and any ATO assessment or DPN received.
Classification reviewed
A tax lawyer reviews the worker arrangements against the current legal tests and advises on the strength of your position.
Dispute managed
The dispute is managed through objection, negotiation with the ATO, or formal appeal — depending on the circumstances.
21 Days
Director Penalty Notice response window — strict deadline, no extension. Immediate legal advice is critical upon receipt
All 8 States
PAYG and employee/contractor dispute specialists matched across every Australian state and territory
Free
Initial consultation — understand your exposure before the ATO assessment lands
Many Reduced
PAYG and SGC assessments are regularly reduced through objection and negotiation — especially where classification is genuinely borderline
Before You Respond
Practical questions about PAYG and contractor disputes.
How does the ATO now determine if a worker is an employee or contractor? +
Following the High Court's 2022 decisions in CFMMEU v Personnel Contracting and ZG Operations, the classification test focuses primarily on the terms of the written contract — not the practical reality of the arrangement. If the contract is comprehensive, it is the starting point. However, practical indicia still matter where the contract does not address a particular aspect of the relationship.
If the ATO reclassifies my workers, how far back can it go? +
For PAYG withholding, the ATO can generally assess up to 4 years back (or longer if fraud is alleged). For SGC, there is no limitation period — the ATO can go back as far as the misclassification extends. The potential liability can therefore be substantial, which is why getting the classification right — and challenging a reclassification with evidence — is so important.
Can a Director Penalty Notice be challenged or avoided? +
A DPN can sometimes be challenged on the basis that the director had no knowledge of the unpaid obligations, that they were newly appointed, or in some cases that the underlying liability is incorrect. For "non-lockdown" DPNs (where the obligations were reported on time), placing the company into voluntary administration or winding it up within 21 days can extinguish personal liability. Immediate legal advice is essential.
What is the superannuation guarantee charge and how is it calculated? +
The SGC is a penalty-based charge that applies when super contributions are paid late or not at all. Unlike regular super contributions, SGC is calculated on ordinary time earnings (not just OTE), includes a nominal interest component of 10% per annum, and an administration charge. SGC is not tax deductible, making it significantly more expensive than simply paying the super on time.
Can I vary my PAYG instalment if my income has dropped? +
Yes — you can vary your PAYG instalment amount by lodging a BAS with a varied instalment figure. If your actual tax liability is less than the cumulative instalments paid, you will receive a credit at year end. If you vary downward and the variation is too low, the ATO can apply a variation penalty — so care is needed in calculating the revised estimate.
Does voluntarily disclosing PAYG errors reduce penalties? +
Yes — voluntary disclosure before the ATO commences a review or audit is a recognised ground for penalty remission and generally results in lower penalty rates. However, whether to disclose, when, and how should not be decided without legal advice — disclosing in the wrong way or admitting the wrong things can worsen your position.
Have a question not covered here? Submit your request and a tax lawyer will be in touch.
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