Taxation Administration Act Special tax table -
Joint Petroleum Development Area Withholding Schedule
Explanatory Statement
General Outline of Instrument
- This instrument is made by the Commissioner of Taxation (the Commissioner) pursuant to section 15-25 of Schedule 1 to the Taxation Administration Act 1953 (TAA).
- The instrument makes publicly available the withholding schedule, which the Commissioner is empowered to make, specifying the amounts, formulas and procedures to be used for working out the amount required to be withheld by an entity in accordance with the pay as you go (PAYG) system.
- In making the instrument, the Commissioner has had regard to the Income Tax Rates Act 1986.
- This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
- This legislative instrument will revoke Legislative Instrument No. F2006L03348 registered on the 13th day of October 2006.
Date of effect
6. The instrument applies from 15 February 2009.
What is this instrument about?
7. The purpose of this instrument is to help taxpayers meet their annual income tax liability. They are required to pay amounts of their income at regular intervals as it is earned during the year. The system for collecting these amounts is called the PAYG withholding system.
8. This instrument provides information on how to work out the amount an entity must withhold from payments to individual taxpayers. The information is contained in the schedule to the instrument. The schedule is also known as a withholding schedule.
What is the effect of this Instrument?
9. The effect of this instrument is to support the PAYG withholding system, which provides a simple and convenient way for most people to meet their annual tax obligations as income is earned.
10. The people who find the information most useful are employers, professional advisers, software developers, the Australian Taxation Office (Tax Office) and any other party that may be involved in engaging workers in the Joint Petroleum Development Area.
11. This instrument also withdraws the earlier version of the withholding schedule (Schedule 23) in order to provide certainty to PAYG withholding payers with regard to their withholding obligations.
Background
12. The PAYG arrangements, introduced in A New Tax System (Pay As You Go) Act 1999, represent the most effective, simple and convenient way for most people to meet their annual income tax liability, either through instalments or withholding, as income is earned. They eliminate large end-of-year tax bills and ensure that Government has the revenue it needs during the year to provide benefits and services to the community.
13. The TAA empowers the Commissioner to make withholding schedules specifying the amounts, formulas and procedures to be used for working out the amount required to be withheld by an entity. The TAA requires the Commissioner to make each withholding schedule publicly available.
13. Each withholding schedule is tailored to meet the circumstances of a particular class of employee. The version of the Schedule to the instrument has been developed to:
- clarify how much of the tax paid to Timor-Leste is to be allowed as a credit in the Australian tax return – the credit is subtracted from the PAYG amount that would otherwise be remitted to the Tax Office
- clarify the information that needs to be provided to the payee, and
- update the examples to reflect these changes.
Consultation
14. The making and publication of withholding schedules is a routine part of taxation administration.
15. The Tax Office will provide the necessary information to payroll and software providers, and those employers who code their own in-house payroll systems, to ensure that they have sufficient time to update their packages.
16. The Tax Office will make the schedule publicly available.
17. This legislative instrument has been subject to a cost compliance calculation as recommended by the Office of Best Practice and Regulation. An assessment of the compliance cost impact of this legislative instrument indicates that the impact will be low for both implementation and on-going compliance costs. This instrument is routine in nature.
Erin Holland
Deputy Commissioner of Taxation
5 February 2009
Legislative references:
Taxation Administration Act 1953
Legislative Instruments Act 2003
Income Tax Rates Act 1986
A New Tax System (Pay As You Go) Act 1999
Overview
The Taxation Administration Act Special Tax Table - Joint Petroleum Development Area Withholding Schedule was enacted in 2009. It was introduced to address the need for a clear and updated withholding schedule for the Joint Petroleum Development Area, ensuring that entities withholding taxes from payments to individual taxpayers have the necessary information to comply with their obligations under the pay-as-you-go (PAYG) system. The instrument was made by the Commissioner of Taxation under the authority granted by the Taxation Administration Act 1953, with the objective of assisting taxpayers in meeting their annual income tax liabilities by providing a straightforward and convenient method for tax collection as income is earned. This legislative instrument revokes the previous withholding schedule to ensure taxpayers have the most current information for their withholding obligations.
Scope and Application
The Taxation Administration Act Special Tax Table - Joint Petroleum Development Area Withholding Schedule is an instrument made by the Commissioner of Taxation under section 15-25 of Schedule 1 to the Taxation Administration Act 1953 (TAA). This legislative instrument, which applies from 15 February 2009, is designed to assist taxpayers in meeting their annual income tax liability through the pay as you go (PAYG) withholding system. It provides specific information on the amounts, formulas and procedures to be used for calculating the tax to be withheld from payments to individual taxpayers, which is detailed in the withholding schedule. This instrument is particularly relevant to employers, professional advisers, software developers, the Australian Taxation Office, and any other parties involved in engaging workers in the Joint Petroleum Development Area. It replaces the earlier version of the withholding schedule to ensure clarity and certainty in the withholding obligations for taxpayers. The purpose of this instrument is to facilitate the PAYG withholding system, which is an effective and convenient method for taxpayers to meet their annual tax obligations as income is earned. The instrument is subject to the Legislative Instruments Act 2003 and takes into account the Income Tax Rates Act 1986.
Key Provisions
The Taxation Administration Act Special Tax Table - Joint Petroleum Development Area Withholding Schedule (F2009L00304) is a legislative instrument made by the Commissioner of Taxation under section 15-25 of Schedule 1 to the Taxation Administration Act 1953 (TAA). It aims to provide taxpayers with a withholding schedule that details the amounts, formulas, and procedures for calculating the amount to be withheld under the pay-as-you-go (PAYG) system. This withholding schedule is intended to assist entities in correctly calculating the tax to be withheld from payments to individual taxpayers in the Joint Petroleum Development Area. The schedule was developed in consultation with the Income Tax Rates Act 1986 and replaces an earlier version (Legislative Instrument No. F2006L03348) to ensure clarity and consistency in tax withholding practices.
The withholding schedule in this legislative instrument is designed to clarify the amount of tax paid to Timor-Leste that can be credited against Australian tax liability, provide guidelines on the information that needs to be communicated to the payee, and update examples to reflect recent changes. It is particularly useful for employers, professional advisers, software developers, and the Australian Taxation Office (ATO) who are involved in the employment of workers in the Joint Petroleum Development Area. The instrument is publicly available and aims to support the PAYG withholding system by ensuring taxpayers meet their annual tax obligations conveniently and effectively as their income is earned.
Entities governed by this Act are required to use the withholding schedule to accurately calculate the amount of tax to be withheld from payments to employees in the Joint Petroleum Development Area. They must ensure that the correct tax credit is applied for taxes already paid to Timor-Leste and that relevant information is provided to the payees. The withholding schedule serves as a critical tool for compliance, helping entities avoid discrepancies in tax withholding and ensuring that the ATO receives the appropriate amount of tax throughout the year.
Failure to comply with the provisions of this withholding schedule may result in penalties and legal consequences. Entities that do not correctly apply the withholding schedule may face audits, fines, and other enforcement actions by the ATO. The maximum penalties for non-compliance can include substantial financial penalties, interest on unpaid tax amounts, and potential legal action. It is crucial for entities to adhere to the guidelines provided in the withholding schedule to avoid these repercussions and ensure smooth tax compliance processes.