Pay as you go (PAYG) withholding
Notice of variation of amount required to be withheld
_______________________________________________________________________
I, Erin Kathleen Holland, Deputy Commissioner of Taxation, vary the amount required to be withheld to an amount equal to twenty (20) percent of the payment, where the payment is:
- covered by section 12-35 or subsection 12-60(2) in Schedule 1 to the Taxation Administration Act 1953 and of a kind covered by regulation 44(1)(c) of the Taxation Administration Regulations 1976, and
- within the class of cases described below.
I made this variation of the amount required to be withheld under the power contained in section 15-15 in Schedule 1 to the Taxation Administration Act 1953 to meet the special circumstances of that class of cases.
This variation is effective for payments made from 1 January 2004.
Class of cases
Payments made under a contract to an individual engaged as a performing artist to perform in a promotional activity that is:
(i) conducted in the presence of an audience, or
(ii) intended to be communicated to an audience by print or electronic media, or
(iii) for a film or tape, or
(iv) for a television or radio broadcast, and
where the individual has provided the payer with a Tax file number declaration form quoting their tax file number.
Expressions referred to above under the heading ‘Class of cases’ have the same meaning as in regulation 44 of the Taxation Administration Regulations 1976.
Signed at Canberra, this 12th day of December 2003.
Signed by Erin Holland
Deputy Commissioner of Taxation
Overview
The Taxation Administration Amendment (PAYG Withholding and Other Measures) Instrument 2003 (F2005B03114) was enacted to address the need for a specific withholding rate for payments made to performing artists engaging in promotional activities. This legislative instrument was issued under the authority of the Taxation Administration Act 1953, specifically section 15-15, and came into effect on 1 January 2004. The objective of this legislative measure was to create a clear framework for the Pay As You Go (PAYG) withholding on payments to performing artists, ensuring accurate tax collection in circumstances where artists perform in front of an audience, through media, or for film, tape, television, or radio broadcasts. The policy objective was to meet the special circumstances of these promotional activities by setting a distinct withholding rate, thereby simplifying tax compliance for both payers and artists.
Scope and Application
The legislative instrument F2005B03114, issued under the authority of the Taxation Administration Act 1953, specifies a variation in the amount required to be withheld for certain payments made to performing artists. This variation applies to payments made to individuals engaged as performing artists for promotional activities that meet specific criteria, such as being conducted in the presence of an audience or intended for communication to an audience through various media. The variation sets the withholding amount at twenty percent of the payment, applicable to cases where the individual has provided a Tax file number declaration form to the payer. This instrument operates within the Commonwealth jurisdiction and is effective from 1 January 2004. It does not specify exclusions or exemptions beyond the outlined class of cases, and its application may be further defined or extended through subordinate regulations under the Taxation Administration Regulations 1976.
Key Provisions
The key provision of this legislative instrument (F2005B03114) is the variation of the amount required to be withheld under the Pay as You Go (PAYG) withholding scheme. Section 15-15 of Schedule 1 to the Taxation Administration Act 1953 empowers the Deputy Commissioner of Taxation to vary the withholding amount. In this case, the withholding amount is set at twenty percent (20%) for specific payments made to individuals engaged as performing artists. These payments must be under a contract and for promotional activities such as performances in the presence of an audience, print or electronic media communications, recordings for film or tape, or broadcasts for television or radio. The withholding variation applies to payments made from 1 January 2004 and requires the artist to have provided a Tax file number declaration form quoting their tax file number to the payer.
The Act imposes obligations on both payers and performing artists. For payers, the obligation is to withhold 20% of the payment if the criteria outlined in the legislative instrument are met. This means the payer must ensure that the artist has provided a valid Tax file number declaration form before making the payment. For the performing artist, the obligation is to provide the payer with an accurate Tax file number declaration form. This form is essential for the payer to determine the correct withholding amount, thereby ensuring compliance with the Act.
Failure to comply with the provisions of the Act can result in significant consequences. For payers who fail to withhold the correct amount as specified, there can be civil penalties. The maximum penalty for non-compliance can be severe, potentially amounting to substantial fines. Additionally, if the non-compliance is deemed to be due to negligence, the payer may face further penalties. For performing artists who do not provide a valid Tax file number declaration form, there can be implications for their tax obligations and potential audits by the Australian Taxation Office. It is crucial for both parties to adhere to the requirements to avoid these consequences.