W3 — Other amounts withheld¶

W3 – Other amounts withheld is one of the PAYG withholding labels on your BAS. It is for amounts you withheld from payments that are not wages. The most common case is money you held back from investment income — such as interest or dividends — when the person you paid did not give you their tax file number.

The BAS is the business activity statement — the form you send to the Australian Taxation Office (ATO). PAYG stands for pay as you go, the system of holding back tax from certain payments and sending it to the ATO. A tax file number (TFN) is the personal reference number the ATO uses to identify a taxpayer.

In one line

W3 is for amounts you withheld from payments other than wages — most often from investment income where the payee did not quote a tax file number.

Why this matters¶

Most small employers only ever deal with wages withholding, which goes at W2. W3 is a separate, less common label. Knowing what it is for means you can tell at a glance whether it applies to you — and in most cases it simply stays blank.

What you will learn¶

What the W3 other amounts withheld label is
How W3 differs from W2 wages withholding
Why most small employers rarely need to complete W3

Understanding the concept¶

W2 is where you report tax you withheld from wages — the pay you give your employees. W3 is different. It is for tax you withheld from other kinds of payments.

The ATO says the main thing that belongs at W3 is amounts you withheld from investment income — such as interest, dividends, or unit trust or other investment distributions — when the person you paid did not provide a tax file number. When no TFN is quoted, the payer generally has to hold back an amount and send it to the ATO. That withheld amount is reported at W3.

The ATO also lists a few other, less common payments at W3, such as certain payments made to a foreign resident and certain departing Australia superannuation payments. If none of these apply to you, you leave W3 blank.

For accountants & bookkeepers

W3 captures withholding events outside the salary and wages stream reported at W1/W2. The ATO includes here TFN-not-quoted withholding on interest, dividends and investment distributions, withholding on interest, dividend or royalty payments to foreign residents, and departing Australia superannuation payments. Investment bodies separately report withheld amounts in the Annual investment income report. The payee is not repaid the withheld amount — they claim it as a credit in their own income tax return. For a typical small trading business with only employees, W3 is nil.

Example¶

Jordan runs a small family investment company that pays interest to a handful of investors. One investor never provides a tax file number. Because no TFN was quoted, Jordan's company has to hold back an amount from that investor's interest and send it to the ATO. When Jordan completes the BAS, that held-back amount goes at W3, not W2 — because it came from investment income, not from wages. The company's ordinary staff wages still have their withholding reported separately at W2.

Common mistakes¶

Putting investment-income withholding at W2 — wages withholding goes at W2, other withholding goes at W3.
Assuming W3 always applies — most small employers leave it blank.
Repaying the withheld amount to the investor — the payee claims it as a credit in their own tax return instead.

How this works in myaccountant¶

In the app — myaccountant prepares your BAS from your own records and shows the PAYG withholding labels, including W3, on the statement you review. Because W3 covers uncommon, non-wage withholding, most small businesses will see it sitting at nil.

Key points¶

W3 is for amounts withheld from payments other than wages.
The main case is investment income where no tax file number was quoted.
W2 is for wages withholding; W3 is separate.
W3 can also cover certain foreign-resident and departing-super payments.
The payee claims the withheld amount as a credit in their own tax return.
Most small employers leave W3 blank.

Learn next¶

General information only — not tax, super or financial advice.

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