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PAYG

PAYG (Pay As You Go) is the Australian system where tax is withheld from wages or business payments during the year. In finance, PAYG usually refers to income verification for employees applying for Vehicle Finance, Equipment Finance and Business Loans. Lenders use PAYG income documents to confirm stable earnings and servicing capacity. Related terms: Payslip, Bank Statements, Affordability.

Why PAYG Matters

Lenders rely on PAYG income to assess loan repayments because it provides predictable income data and reduces risk for approvals. Clear PAYG history also helps when comparing options like traditional business loans versus Working Capital Loans or a Business Line of Credit.

  • Shows consistent employment income for servicing tests
  • Used to confirm borrower stability and tenure
  • Critical for many consumer vehicle loans
  • Required for a lot of full-doc business loan applications
  • Helps ensure the correct tax is being withheld during the year

How PAYG Works

  • Employers withhold tax from wages throughout the year and remit it to the ATO
  • Income details are summarised in income statements (via myGov)
  • Lenders use payslips, bank feeds or income statements to verify employment
  • PAYG summaries are reconciled when you lodge your tax return
  • PAYG income can support both personal loans and business lending in your own name

PAYG is most common for employees, while self-employed applicants rely more on ABN income, BAS or full financial statements. If you are moving from PAYG into self-employment, a broker can help you structure low doc asset finance and transition from payslips to ABN-based servicing over time.

Official reference: ato.gov.au

What documents show PAYG income?
Payslips, income statements (myGov) and bank statement deposits are the most common documents used to show PAYG income.
Can PAYG employees get low doc loans?
Usually no — low doc loans are designed for ABN holders who do not have up-to-date financials, not standard PAYG employees.
Does PAYG apply to contractors?
Some contractors may be under PAYG withholding through labour-hire or umbrella companies, but many operate under ABNs instead.
Do lenders prefer PAYG income?
Yes — stable PAYG income is considered lower risk by most lenders compared with newer self-employed income.
Is PAYG required for business loans?
For business loans, PAYG income can support personal servicing but is not always required — especially where business cashflow, invoice finance or assets are strong.