Income Tax Regulations (Amendment) 1993 No. 15
EXPLANATORY STATEMENT
STATUTORY RULES 1993 No. 15
ISSUED BY THE AUTHORITY OF THE TREASURER
Income Tax Assessment Act 1936
Income Tax Regulations (Amendment)
These Regulations are made under the Income Tax Assessment Act 1936 (the Act) and complement the recent amendments to the Prescribed Payments System (PPS) provisions contained in Division 3A of Part VI of the Act. The amendments, which simplify the administration of the PPS, were contained in Taxation Laws Amendment Act (No. 6) 1992.
Under the simplified arrangements, payers report details of payments made on an annual instead of the current monthly basis. Also, the Commissioner of Taxation will obtain details of payees from a new payee declaration form instead of the current deduction forms which generally have to be completed by both payers and payees each time a payment is made. Finally, the current arrangements for deduction variation and exemption certificates have been modified to make it easier for payers and payees to comply with the PPS provisions.
These Regulations relate principally to the amounts deducted under the PPS system and the forwarding of those amounts and associated forms to the Commissioner.
An explanation of the Regulations appears below.
Regulation 1 provides that the Income Tax Regulations will be amended as set out in these amending Regulations. The amending Regulations will commence on gazettal.
Regulation 2 omits Regulation 128 which currently describes the relevant amount to be deducted from prescribed payments. Regulation 128 is no longer necessary because the amounts to be deducted from prescribed payments under the simplified arrangements are determined from sections 221YHD and 221YHDA of the Act.
Regulation 3 changes Regulation 129 to accommodate the new reporting arrangements. Amended Regulation 129 refers to the new forms and details where those forms are to be sent under the simplified arrangements.
Regulation 4 changes Regulation 130 to provide that amounts deducted from prescribed payments must be sent to the Deputy Commissioner where the new forms referred to in Regulation 129 are sent.
Regulation 5 replaces Regulation 131 and provides how payers are to provide the new payment summary and householder payment summary forms to payees. These forms replace the deduction forms which are currently referred to in Regulation 131.
Regulation 6 alters the sub-sectional reference in Regulation 132 because of a change in numbering of the directing section in the Act. Regulation 132 is otherwise unchanged.
Overview
The Income Tax Regulations (Amendment) 1993 No. 15 were introduced to align the Income Tax Regulations 1936 with the recent amendments to the Prescribed Payments System (PPS) provisions. These amendments, contained in the Taxation Laws Amendment Act (No. 6) 1992, aimed to simplify the administration of the PPS by introducing changes such as annual reporting instead of monthly reporting, a new payee declaration form, and modifications to deduction variation and exemption certificates. The regulations were issued under the authority of the Treasurer and were designed to update the Income Tax Regulations to reflect the new simplified arrangements, ensuring that payers and payees could more easily comply with the PPS provisions. The objective of these amendments was to streamline the tax reporting process and reduce the administrative burden on both payers and payees.
Scope and Application
The Income Tax Regulations (Amendment) 1993 No. 15 applies to entities and individuals involved in the reporting and payment of prescribed payments under the Prescribed Payments System (PPS), as regulated by the Income Tax Assessment Act 1936. This includes businesses and individuals who make payments to other entities or individuals, and those who receive such payments. The regulations impact the entire Commonwealth of Australia, as they are federally governed under the Act. The amendments simplify the administrative processes by changing the frequency of reporting from monthly to annual, modifying the forms required for reporting and the submission process, and altering the method for obtaining details of payees. The new regulations do not explicitly mention any exclusions or exemptions, but they do streamline the processes by replacing old forms with new ones, such as the payment summary and householder payment summary forms. The scope of the application can be further extended or specified through subordinate instruments made under the authority of the Treasurer.
Key Provisions
The Income Tax Regulations (Amendment) 1993 No. 15 modifies the Income Tax Regulations to align with the recent amendments to the Prescribed Payments System (PPS) provisions in the Income Tax Assessment Act 1936. These amendments, introduced by the Taxation Laws Amendment Act (No. 6) 1992, simplify the administration of the PPS. Key provisions include Regulation 1, which outlines the amendments to the Income Tax Regulations and their commencement on gazettal (Regulation 1). Regulation 2 omits Regulation 128, which previously described the amount to be deducted from prescribed payments; this omission is due to the amounts now being determined by sections 221YHD and 221YHDA of the Act (Regulation 2). Regulation 3 modifies Regulation 129 to reflect the new reporting arrangements, including references to new forms and the details to be submitted (Regulation 3). Regulation 4 updates Regulation 130 to specify that amounts deducted from prescribed payments must be sent to the Deputy Commissioner, aligning with the new forms referenced in Regulation 129 (Regulation 4). Regulation 5 replaces Regulation 131, detailing how payers are to provide the new payment summary and householder payment summary forms to payees, which replace the former deduction forms (Regulation 5). Finally, Regulation 6 adjusts the sub-sectional reference in Regulation 132 due to a change in the section numbering in the Act, though the content of Regulation 132 remains unchanged (Regulation 6).
The Income Tax Regulations (Amendment) 1993 No. 15 imposes several obligations on payers and payees under the simplified PPS arrangements. Payers must report payment details annually rather than monthly and must use new payee declaration forms instead of the previous deduction forms. The payers are also responsible for providing the new payment summary and householder payment summary forms to payees (Regulation 5). Payees, on the other hand, must complete the new payee declaration form to provide details to the Commissioner of Taxation. These obligations aim to streamline the reporting process and make compliance easier for both parties. Additionally, the regulations require that amounts deducted from prescribed payments be forwarded to the Deputy Commissioner, as stipulated in Regulation 4.
The Income Tax Regulations (Amendment) 1993 No. 15 does not explicitly outline specific offences, penalties, or consequences for non-compliance. However, non-compliance with the Income Tax Assessment Act 1936 and related regulations can lead to civil and criminal penalties. Under the Act, taxpayers who fail to comply with their obligations can be subject to penalties, including fines and imprisonment for serious or wilful non-compliance. For example, providing false or misleading information can attract penalties of up to 75 penalty units (AUD 17,175 as of 2023) per offence for individuals and up to 375 penalty units (AUD 85,875) for corporations. For taxpayers who engage in tax evasion or fraud, the penalties can be even more severe, with potential fines of up to 1,000 penalty units (AUD 222,500) and imprisonment for up to five years for individuals, and up to 5,000 penalty units (AUD 1,112,500) and imprisonment for up to five years for corporations. These penalties underscore the importance of adhering to the amended regulations and the potential repercussions of non-compliance.