PAYG Withholding Variation: Donations to deductible gift recipients

Administered by Department of the Treasury

Legislation au F2016L01641 In force Legislative Instrument

Legislation content

PAYG Withholding Variation: Donations to deductible gift recipients

Explanatory Statement

 

General Outline of Instrument

  1. This variation is made by the Commissioner of Taxation (the Commissioner) under section 15-15 of Schedule 1 to the Taxation Administration Act 1953.
  2. This instrument enables a variation to the rate of withholding required by a payer under the pay as you go withholding system for payments in a certain class of cases.
  3. This legislative instrument repeals and replaces legislative instrument PAYG Withholding Variation: Donations to deductible gift recipients (F2016L00439), registered on 30 March 2016.
  4. This is a legislative instrument for the purposes of the Legislation Act 2003.
  5. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument

 

Date of effect

6.     This instrument commences on the day after its registration on the Federal Register of Legislative Instruments.

 

What is this instrument about?

7.     Legislative Instrument No. F2016L00439 provided a variation that reduced the amount used to calculate withholding if the payer had made a payment to a deductible gift recipient on behalf of the payee.

8.     That instrument is due for repeal on 1 November 2016, under the sunsetting provisions contained in section 50 of the Legislation Act 2003.

9.     Upon commencement this instrument repeals and replaces F2016L00439 and continues to provide the same treatment for the affected class of cases.

 

What is the effect of this Instrument?

10. This instrument continues to allow a payer to reduce a withholding payment by the amount they pay to a deductible gift recipient on a payee’s behalf.

11. That enables the participant in the workplace giving program to receive the benefit of the tax deductibility of their gift at the time of the donation, rather than wait until their annual income tax assessment. As a result a workplace giving program may be more attractive to potential participants.

12. An assessment of the compliance cost impact indicates that the impact will be minor for both implementation and on-going compliance costs. The new instrument is of a minor or machinery nature.

 

Background

13. This instrument has been developed to provide a reduction in withholding when payers make donations at the direction of payees under a regular planned workplace arrangement.

 

Consultation

14. Broad consultation has occurred. The draft determination and draft explanatory statement were published on the ATO Legal Database at ato.gov.au on 15 September 2016 seeking feedback and comments for a period of two weeks. The ATO Legal Database sends emails and news feeds to direct subscribers such as tax professionals and other industry stakeholders. Consultation on the draft determination and draft explanatory statement was also announced on “What we are consulting about” at ato.gov.au. No comments were received by the due date.

 

 

 

 

Legislative references:

Taxation Administration Act 1953

Legislation Act 2003

Acts Interpretation Act 1901

Human Rights (Parliamentary Scrutiny) Act 2011


Statement of Compatibility with Human Rights

This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

PAYG Withholding Variation: Donations to deductible gift recipients

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview

This Legislative Instrument continues to allow a payer to reduce a withholding payment by the amount they pay to a deductible gift recipient on a payee’s behalf.

 

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms because the new instrument is of a minor or machinery nature.

 

Conclusion

This legislative instrument does not raise any human rights issues.

 

Overview

The PAYG Withholding Variation: Donations to deductible gift recipients, enacted in 2016, addresses the issue of adjusting the pay-as-you-go withholding rates for payments made to deductible gift recipients on behalf of employees through workplace giving programs. This legislative instrument, made under section 15-15 of the Taxation Administration Act 1953 by the Commissioner of Taxation, aims to allow payers to reduce their withholding payments by the amount donated to a deductible gift recipient. This change ensures that participants in workplace giving programs receive the tax benefits of their donations immediately, thereby potentially increasing the attractiveness of such programs. The instrument repealed and replaced a previous legislative instrument, F2016L00439, which was set to expire under the Legislation Act 2003. The new instrument has been designed following broad consultation, with no comments received from the consultation period, and it is deemed to have minor compliance costs and to be compatible with human rights as per the Human Rights (Parliamentary Scrutiny) Act 2011.

Scope and Application

The PAYG Withholding Variation: Donations to Deductible Gift Recipients is a legislative instrument that applies to payers under the pay as you go withholding system in Australia. Specifically, it allows a variation in the rate of withholding for payments made to deductible gift recipients on behalf of payees. This applies to payments made under a regular planned workplace arrangement, enabling participants in workplace giving programs to receive the benefit of tax deductibility at the time of donation. The instrument operates within the framework established by the Taxation Administration Act 1953 and is subject to the conditions outlined in the Acts Interpretation Act 1901. It was developed following broad consultation and aims to provide a reduction in withholding for specified donations, enhancing the attractiveness of workplace giving programs. The instrument is of a minor or machinery nature, as indicated by the assessment of compliance costs, and has been deemed compatible with human rights under the Human Rights (Parliamentary Scrutiny) Act 2011.

Key Provisions

The PAYG Withholding Variation: Donations to Deductible Gift Recipients (F2016L01641) outlines specific provisions for variations in the pay-as-you-go (PAYG) withholding system in Australia, particularly concerning payments made to deductible gift recipients. Under section 15-15 of the Taxation Administration Act 1953, this legislative instrument enables payers to adjust the withholding amount when making donations to deductible gift recipients on behalf of employees as part of a workplace giving program. This adjustment allows employers to reduce the withholding payments by the donation amount, thereby enabling employees to receive the benefit of their tax-deductible donation at the time of the donation rather than during their annual tax assessment (sections 7 and 10). The obligations imposed by this Act require employers participating in workplace giving programs to correctly calculate the withholding amount by reducing it by the donation made to a deductible gift recipient. Employers must ensure that all donations are made in accordance with the conditions set forth in the legislation and that they accurately report these transactions to the Australian Taxation Office (ATO). This involves maintaining appropriate records and documentation to substantiate the deductions claimed (section 11). Failure to comply with the provisions of this Act can result in civil or criminal consequences. While the explanatory statement does not explicitly detail penalties, breaches of PAYG withholding obligations can generally result in penalties under the Taxation Administration Act 1953. These penalties can include fines, interest on unpaid amounts, and potential legal action. The specific penalties for non-compliance are determined by the nature and severity of the breach and may be subject to the maximum penalties provided under the relevant tax laws. It is essential for employers to adhere to the requirements to avoid these repercussions.

Legal classification tags

Area of Law
Taxation Law
Instrument
Legislative Instrument
Concepts
Definitions & Interpretation
Repeal & Amendment
Compliance Obligations
Regulatory Standards

Interactions

Authorises

All Versions

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.