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They mention that if I provide an ABN as a sole trader, they are required to withhold superannuation (9.5%) as well as my income tax component, and remit these to the ATO on my behalf.

Superannuation should not be “withheld”. It is an expense that the company needs to carry and pay on top of your fees.

They also mention that If I don’t provide an ABN, I am essentially a PAYG, with super and tax withheld as required by ATO (which is basically like being an employee I suppose).

“like” being one, but not. If you don’t provide an ABN then they will need to withhold 47% (may be 49% now) of your invoice for PAYG.

Being an employee would be a completely different setup.

Sounds like they may be trying to explain why they will reduce your rate depending on the structure you choose.

Wendy :)