Pay As You Go (PAYG) withholding is a legal requirement to withhold amounts for income tax purposes.
If you have employees, you're required to withhold tax from payments you make to them. You may have to withhold tax from payments to other workers, such as contract workers. As a new employer, you must register with the Australian Taxation Office (ATO) before you withhold from payments to your employees.
You may also need to withhold an amount from payments to other businesses if they don't quote their ABN to you on an invoice or other document if required.
You must send all withheld amounts to the ATO.