Income Tax (TFN Withholding Tax (ESS)) Amendment (DisabilityCare Australia) Act 2013
No. 42, 2013
An Act to amend the Income Tax (TFN Withholding Tax (ESS)) Act 2009, and for related purposes
Contents
1 Short title
2 Commencement
3 Schedule(s)
Schedule 1—Amendments
Income Tax (TFN Withholding Tax (ESS)) Act 2009
Income Tax (TFN Withholding Tax (ESS)) Amendment (DisabilityCare Australia) Act 2013
No. 42, 2013
An Act to amend the Income Tax (TFN Withholding Tax (ESS)) Act 2009, and for related purposes
[Assented to 28 May 2013]
The Parliament of Australia enacts:
1 Short title
This Act may be cited as the Income Tax (TFN Withholding Tax (ESS)) Amendment (DisabilityCare Australia) Act 2013.
2 Commencement
(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information |
Column 1 | Column 2 | Column 3 |
Provision(s) | Commencement | Date/Details |
1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table | The day this Act receives the Royal Assent. | 28 May 2013 |
2. Schedule 1 | At the same time as Schedule 1 to the Medicare Levy Amendment (DisabilityCare Australia) Act 2013 commences. | 28 May 2013 |
Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
(2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
3 Schedule(s)
Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Schedule 1—Amendments
Income Tax (TFN Withholding Tax (ESS)) Act 2009
1 Section 4
Repeal the section, substitute:
4 Rate of tax
The rate of tax imposed by this Act on such an amount is the sum of the following:
(a) the maximum rate specified in the table in Part I of Schedule 7 to the Income Tax Rates Act 1986;
(b) 2%.
2 Application of amendment
The amendment made by this Schedule applies to ESS interests (within the meaning of the Income Tax Assessment Act 1997) provided on or after 1 July 2014.
[Minister’s second reading speech made in—
House of Representatives on 15 May 2013
Senate on 16 May 2013]
Overview
The Income Tax (TFN Withholding Tax (ESS)) Amendment (DisabilityCare Australia) Act 2013 was enacted by the Parliament of Australia to address the funding needs of the DisabilityCare Australia scheme, a part of the National Disability Insurance Scheme (NDIS). This Act amends the Income Tax (TFN Withholding Tax (ESS)) Act 2009, introducing an additional 2% withholding tax on certain employment services superannuation (ESS) interests to support the DisabilityCare Australia component of the NDIS. The policy objective of this Act is to ensure that sufficient funding is available for the DisabilityCare Australia scheme, which provides for the lifetime support needs of people with permanent and significant disabilities. The Act received Royal Assent on 28 May 2013 and commenced on the same date, with the amendments applying to ESS interests provided on or after 1 July 2014.
Scope and Application
The Income Tax (TFN Withholding Tax (ESS)) Amendment (DisabilityCare Australia) Act 2013 amends the Income Tax (TFN Withholding Tax (ESS)) Act 2009 to alter the rate of tax applied to certain employment services superannuation (ESS) interests. Specifically, the Act modifies section 4 of the primary Act to set the rate of tax at the sum of the maximum rate specified in the table in Part I of Schedule 7 to the Income Tax Rates Act 1986 plus an additional 2%. This amendment applies to ESS interests provided on or after 1 July 2014. The Act applies to entities and individuals involved in employment services superannuation, thereby impacting the financial arrangements within the specified industry. Its jurisdiction extends across the Commonwealth of Australia, and while the Act itself outlines the primary changes, further details and specific application may be defined through subordinate instruments.
Key Provisions
The Income Tax (TFN Withholding Tax (ESS)) Amendment (DisabilityCare Australia) Act 2013 amends the Income Tax (TFN Withholding Tax (ESS)) Act 2009 by altering the rate of tax imposed on Employment Separation Security (ESS) interests. Specifically, section 4 of the 2009 Act is repealed and replaced with a new provision (Schedule 1, item 1). The new rate of tax includes the maximum rate specified in the table in Part I of Schedule 7 to the Income Tax Rates Act 1986, plus an additional 2% (Schedule 1, item 1(a) and (b)). This amendment applies to ESS interests provided on or after 1 July 2014 (Schedule 1, item 2).
Entities and individuals subject to the Act are required to comply with the new tax rate structure outlined in section 4 of the amended Act. Employers must withhold the appropriate amount of tax from payments made to employees on or after 1 July 2014, in addition to the standard tax obligations. This involves calculating the tax based on the revised rate and ensuring the correct withholding is applied to the ESS payments. Additionally, employers need to be aware of the definition of ESS interests as per the Income Tax Assessment Act 1997 to correctly identify which payments are subject to the amended tax rate.
Breach of the obligations set out in the amended Act may lead to civil and criminal consequences. The Act does not explicitly state the penalties for non-compliance, but it is understood that failure to correctly withhold and remit the amended tax could result in penalties under the Income Tax Assessment Act 1997. These penalties may include fines and interest on any unpaid tax. Employers who do not comply with the withholding requirements may face legal action, which could lead to substantial financial repercussions and damage to their reputation. It is crucial for entities to ensure accurate and timely compliance to avoid these potential consequences.