Income Tax Regulations (Amendment)

Administered by Department of the Treasury

Legislation au F1997B00331 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

STATUTORY RULES 1982 NO. 115

ISSUED BY THE AUTHORITY OF THE TREASURER

These regulations amend regulations 54A and 54DAA of the Income Tax Regulations to provide for the new zone allowance arrangements to be reflected in the rates at which PAYE tax instalments are to be deducted from an employee’s salary or wages, where the employee has lodged with his employer a declaration for PAYE purposes and the salary or wages are paid in the zone areas.

The new arrangements were given effect by amendments made to the Income Tax Assessment Act 1936 by the Income Tax Assessment Amendment Act 1982 (Act No. 29 1982), which received the Royal Assent on 17 May 1982. Under those arrangements, the basic zone rebates ($216 and $36 for Zone A and Zone B respectively) remain unchanged but the part of the rebate that is related to dependants has been increased from 25 per cent to 50 per cent of the relevant dependant rebate amounts for Zone A and from 4 per cent to 20 per cent for Zone B. In addition, a special basic rebate of $750, in lieu of the ordinary basic rebate for each zone, has been introduced for people residing or spending the required period of time in particularly isolated areas.

Regulation 1 includes in regulation 54A definitions of new terms used in amended regulation 54DAA. It defines Zone A, Zone B and the special area within Zone A or Zone B by reference to the meaning of those terms in section 79A of the Income Tax Assessment Act. In terms of that section, Zone A means the area described in Part I of Schedule 2 to the Assessment Act and Zone B means the area described in Part II of that Schedule, while the special area within Zone A or Zone B is constituted by the points within that Zone that are in excess of 250 kilometres by the shortest practicable surface route from the centre point of the nearest urban centre with a population of 2,500 or more.


Regulation 2 amends regulation 54DAA to provide for appropriate reductions in the tax instalments that would otherwise be deducted by an employer from salary or wages paid in a zone area to an employee who has lodged with the employer a declaration for PAYE purposes. The amount of the appropriate deduction - which is the weekly equivalent of the basic zone rebate and of the relevant percentage of any rebates for dependants - depends upon the particular zone area in which the employee is paid and upon the rebate claims in respect of dependants made by the employee in the declaration.

Paragraphs (a), (b) and (c) of regulation 2 amend sub-regulation 54DAA(1) to provide that, where an employee is paid in the special area within Zone A, the amount of the instalment that would otherwise be deducted from the employee’s weekly earnings is to be reduced by $14.40 if the employee has not claimed any dependant rebate or zone dependant rebate, and by $14.40 plus 24 cents for each whole $25 of dependant rebates and/or zone dependant rebates claimed, rounded to the nearest 5 cents.

Paragraphs (d), (e) and (f) amend sub-regulation 54DAA(2) to provide that, where an employee is paid in the special area within Zone B, the weekly instalment otherwise deducted is to be reduced by $14.40 if the employee has not claimed a dependant rebate or zone dependant rebate, and by $14.40 plus 10 cents for each whole $25 of dependant and/or zone dependant rebates claimed, rounded to the nearest 5 cents.

Paragraph (g) inserts new sub-regulation 54DAA(3), which applies where an employee is paid in Zone A but not in the special area within Zone A and provides that the amount of the instalment that would otherwise be deducted is to be reduced by $4.15 if the employee has not claimed a dependant or zone dependant rebate, and by $4.15 plus 24 cents for each whole $25 of dependant and/or zone dependant rebates claimed, rounded to the nearest 5 cents.


Paragraph (h) inserts new sub-regulation 54DAA(4), which applies where an employee is paid in Zone B but not in a special area within Zone B and provides that the instalment otherwise deducted is to be reduced by 70 cents if the employee has not claimed a dependant or zone dependant rebate, and by 70 cents plus 10 cents for each whole $25 of dependant and/or zone dependant rebates claimed, rounded to the nearest 5 cents.

Overview

The Statutory Rules 1982 No. 115, issued under the authority of the Treasurer, were enacted to amend the Income Tax Regulations 1982, specifically regulations 54A and 54DAA, to implement the new zone allowance arrangements introduced by the Income Tax Assessment Amendment Act 1982. This amendment addresses the need to accurately reflect the new tax rebate structures for employees residing or working in designated zone areas, ensuring appropriate PAYE tax instalment deductions are made from their salaries or wages. The regulations provide for reductions in the tax instalments that would otherwise be deducted from an employee's salary or wages, depending on whether the employee has lodged a PAYE declaration and the particular zone area in which they are paid. The policy objective is to ensure that employees in designated zones receive accurate tax deductions that reflect the updated rebate arrangements.

Scope and Application

The regulations, Statutory Rules 1982 No. 115, issued under the authority of the Treasurer, amend regulations 54A and 54DAA of the Income Tax Regulations to implement new zone allowance arrangements affecting the PAYE tax instalments deducted from an employee's salary or wages. These amendments apply to employees who have lodged a PAYE declaration with their employer and who are paid in designated zone areas. The zones include Zone A, Zone B, and a special area within either Zone A or Zone B, defined by reference to the Income Tax Assessment Act 1936. The regulations reflect changes in the rebate amounts for dependants, with increased percentages for Zone A and Zone B, and introduce a special basic rebate for particularly isolated areas. The application of these changes is governed by the specific zone in which the employee is paid, and the rebates claimed in the declaration, resulting in varied reductions to the tax instalments deducted by employers.

Key Provisions

The Statutory Rules 1982 No. 115 issued under the authority of the Treasurer amend regulations 54A and 54DAA of the Income Tax Regulations to reflect new zone allowance arrangements in the rates at which PAYE tax instalments are deducted from an employee’s salary or wages. These changes are particularly relevant for employees who have lodged a declaration for PAYE purposes and are paid in zone areas (section 2). The amendments ensure that the new arrangements introduced by the Income Tax Assessment Amendment Act 1982 are properly implemented in the tax deduction process. The Act imposes specific obligations on employers to correctly apply the new zone rebate rates when deducting PAYE tax from employees' wages. Employers must reduce the tax instalments according to the zones and rebate claims outlined in the amended regulation 54DAA. For instance, if an employee is paid in a special area within Zone A, the employer must reduce the tax instalment by $14.40 if no dependant rebates are claimed, and by $14.40 plus 24 cents for each $25 of dependant rebates claimed, rounded to the nearest 5 cents (section 2(a)-(c)). Similarly, for employees paid in a special area within Zone B, the employer must reduce the tax instalment by $14.40 if no dependant rebates are claimed, and by $14.40 plus 10 cents for each $25 of dependant rebates claimed, rounded to the nearest 5 cents (section 2(d)-(f)). These obligations ensure that employees receive the correct tax deductions based on their rebate claims and the zones in which they are paid. Failure to comply with the obligations set forth in these regulations may lead to incorrect tax deductions, which can have legal consequences. While the explanatory statement does not explicitly mention penalties for non-compliance, it is important to note that incorrect application of tax regulations can result in financial discrepancies and potential audits by the Australian Taxation Office (ATO). Employers are advised to ensure accurate application of the new zone rebate rates to avoid any adverse consequences.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.