PAYG Withholding Variation: Variation of amount to be withheld from Indigenous artists when an ABN is not provided

Administered by Department of the Treasury

Legislation au F2016L00358 Not in force Legislative Instrument

Legislation content

 

Explanatory Statement

 

PAYG Withholding Variation: Variation of amount to be withheld from Indigenous artists when an ABN is not provided

 

 

General Outline of Instrument

 

  1. This instrument is made under section 15-15 and 16-180 of Schedule 1 to the Taxation Administration Act 1953.
  2. This instrument varies the amount of withholding to nil in certain classes of cases described below.
  3. This instrument also removes the requirement to provide payment summaries for those payments.
  4. The instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

Date of effect

 

5.      The instrument commences on 1 April 2016.

 

What is this instrument about

 

6.      Legislative Instrument No. F2006B00477, provided a variation to the rate of withholding to NIL for any payment to an indigenous artist for artistic works where the indigenous artist works or lives in zone A (ordinary or special) and does not quote an Australian Business Number (ABN).

7.       This instrument is due for repeal on 1 April 2016, under the sunsetting provisions contained in Section 50 of the Legislative Instruments Act 2003.This instrument replaces that instrument from that date.

 

What is the effect of this instrument

8.       This instrument reduces compliance costs for indigenous artists who live in remote areas and the businesses that pay them.

9.       The variation provides a NIL withholding amount for indigenous artists who live or work in zone A or special zone A and do not quote an ABN.  As a result, artists who are covered by the instrument are not required to register for an ABN in relation to their artistic activities.

10.   Zone A has the meaning given in Schedule 2 of the Income Tax Assessment Act 1936 as  in force from time to time. Special zone A lies within that zone and is defined in subsection 79(3D) of that act. Zone A is an area of Australia which, due to isolation and other factors, suffers disadvantage in comparison with less remote areas. For more information about Special or Ordinary Zone A visit our website www.ato.gov.au and search for ‘Indigenous artists who live or work in isolated areas may not need to quote an ABN’.

11.   This provides a less onerous arrangement for those artists who, for reasons such as age, language, level of education and isolation, may not be able to fully engage with the complexities of the taxation system. Often the relevant artistic works are a joint product of a number of contributing artists, which further complicates the taxation treatment which may apply.

12.   Gallery owners and other relevant payers believe that their businesses would be adversely affected if they were required to withhold where artists are unable to quote an ABN.

13.  A withholding rate of NIL will apply to these payments.

14.  This rate will be appropriate for most payment recipients.

15.  Because the withholding rate is reduced to NIL, the requirement to provide payment summaries in respect of these payments is removed.

16.  An assessment of the compliance cost 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

 

17.  The variation is created to lessen the compliance burden on indigenous artists, gallery owners and other relevant payers.

 

Consultation:

 

18.  The existing instrument was developed following a consultation process which was coordinated by the Ministry for the Arts in 2001. Buyers of indigenous art and the Ministry for the Arts have been consulted and have confirmed that they want the arrangements to continue.

19.  Wider consultation was not considered to be necessary because the instrument merely preserves a concession that would otherwise be removed as a consequence of the impending repeal of the existing instrument.

 

 

 

 

 

 

Legislative references:

Taxation Administration Act 1953

Legislative Instruments Act 2003

Income Tax Assessment Act 1936

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: Variation of amount to be withheld from Indigenous artists when an ABN is not provided

 

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

 

The variation provides a NIL withholding amount for indigenous artists who live or work in zone A and do not quote an ABN.  As a result artists who are covered by the instrument are not required to register for an ABN in relation to their artistic activities.

 

This instrument provides a less onerous arrangement for those artists who, for reasons such as age, language, level of education and isolation may not be able to fully engage with the complexities of the taxation system. Often the relevant artistic works are a joint product of a number of contributing artists, which further complicates the taxation treatment which may apply.

 

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: Variation of Amount to be Withheld from Indigenous Artists when an ABN is Not Provided, introduced by Legislative Instrument No. F2016L00358, was enacted in 2016 to address the unique challenges faced by Indigenous artists living in remote areas, particularly those who are unable to quote an Australian Business Number (ABN) due to factors such as age, language, level of education, and isolation. This instrument, made under section 15-15 and 16-180 of the Taxation Administration Act 1953, aims to lessen the compliance burden on these artists and the businesses that pay them by varying the withholding amount to nil and removing the requirement to provide payment summaries for certain payments. The policy objective is to provide a less onerous arrangement for Indigenous artists, facilitating their engagement with the taxation system while considering the complexities of their work, often a joint product of multiple contributing artists. This legislative instrument is compatible with human rights as it does not engage any applicable rights or freedoms, given its minor or machinery nature.

Scope and Application

The PAYG Withholding Variation: Variation of amount to be withheld from Indigenous artists when an ABN is not provided, as set out in F2016L00358, applies to indigenous artists who live or work in zone A or special zone A of Australia and do not provide an Australian Business Number (ABN). This legislation, made under sections 15-15 and 16-180 of Schedule 1 to the Taxation Administration Act 1953, provides a nil withholding rate for payments made to these indigenous artists, thereby reducing their compliance burden and simplifying their interaction with the taxation system. This applies to payments made from 1 April 2016 onwards, and the instrument is intended to be of minor or machinery nature, with minimal impact on ongoing compliance costs. The legislation also removes the requirement for these artists to provide payment summaries for such payments. This variation is designed to alleviate the compliance costs for both the artists and the businesses that pay them, particularly given the challenges that indigenous artists in remote areas face in engaging with the complexities of the taxation system.

Key Provisions

The PAYG Withholding Variation legislation, identified as F2016L00358, primarily alters the withholding tax rate for certain payments made to Indigenous artists. Under sections 15-15 and 16-180 of Schedule 1 to the Taxation Administration Act 1953, this legislation sets the withholding rate to nil for Indigenous artists residing or working in zone A, as defined in Schedule 2 of the Income Tax Assessment Act 1936, and who do not provide an Australian Business Number (ABN). This variation is intended to alleviate the administrative burden on Indigenous artists and businesses that compensate them for artistic works. Zone A encompasses areas in Australia that experience significant isolation and disadvantage compared to less remote regions. This Act imposes specific obligations on both the Indigenous artists and the businesses paying them. Indigenous artists within zone A who do not provide an ABN are exempt from having any amount withheld from their payments, which also eliminates the necessity for businesses to issue payment summaries for these payments. This exemption is designed to simplify the tax compliance process for these artists, who might face challenges such as age, language barriers, or isolation, making the complexities of the taxation system difficult to navigate. Businesses, on the other hand, are relieved from the requirement to withhold tax, thereby reducing their administrative burden. In terms of penalties and consequences, the legislation does not explicitly detail specific penalties for non-compliance. However, general tax laws and regulations may still apply, potentially leading to fines or other legal consequences for failing to adhere to tax obligations. The withholding variation aims to ease the tax burden while ensuring that the integrity of the tax system is maintained, particularly by ensuring that the correct amount of tax is ultimately collected.

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Taxation Law
Instrument
Legislative Instrument
Concepts
Commencement Provisions
Offence Provisions
Compliance Obligations
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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.