Taxation Administration Act 1953 - Pay as you go withholding - Taxation Administration Act Withholding Schedules 2015

Administered by Department of the Treasury

Legislation au F2015L00944 Not in force Legislative Instrument

Legislation content

Taxation Administration Act
Withholding Schedules 2015

Explanatory Statement

 

General Outline of Instrument

  1. This instrument is made by the Commissioner of Taxation (the Commissioner) under section 15-25 of Schedule 1 to the Taxation Administration Act 1953 (TAA).
  2. The instrument makes withholding schedules, specifying the formulas and procedures to be used for working out the amount to be withheld by an entity under the pay as you go (PAYG) system.
  3. The instrument contains 11 withholding schedules. Each schedule provides information for calculating the withholding amount, taking into account the particular circumstances presented in the schedule.
  4. This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
  5. The withholding schedules in this instrument replace schedules which were included in Legislative Instrument F2015L00750 which was registered on 28 May 2015.

Date of effect

6.     The instrument applies from 1 July 2015.

 

What is this instrument about?

7.     These schedules set out the formulas and procedures to be used for calculating the amount to be withheld by entities from withholding payments. The withholding schedules facilitate the collection of income tax, Medicare levy, Temporary Budget Repair levy, Higher Education Loan Program, Trade Support Loan and Financial Supplement repayments.

8.     These withholding schedules are being updated to reflect the rates and thresholds which will apply from 1 July 2015 under Schedule 7 to the Income tax Rates Act 1986 and the annual indexation of repayment thresholds for the Higher Education Loan Program, Trade Support Loans and the Student Financial Supplement Scheme.

 

 

 

 

What is the effect of this Instrument?

9.     The effect of this instrument is to provide withholding schedules which support the PAYG withholding system.

10. A number of groups rely upon the withholding schedules. They include: employers, employees, professional tax advisers, payroll software developers, the Australian Taxation Office and payroll service providers.

11. This instrument also revokes previous withholding schedules.

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 routine nature.  

Background

13. The PAYG system is a simple and convenient way for individual taxpayers to meet their annual income tax obligations either through instalments or through withholding as their income is earned. This system aims to prevent large end-of-year tax bills for individuals. It also ensures that Government has the revenue it needs during the year to provide services and benefits to the community.

14. The TAA empowers the Commissioner to make withholding schedules specifying the amounts, formulas and procedures to be used for working out the amounts required to be withheld by entities. The TAA requires the Commissioner to make each withholding schedule publicly available.

15. Each withholding schedule is tailored to meet the circumstances of a particular class of payee or category of payment.

16. Legislative Instrument F2015L00750 which was registered on 28 May 2015, put in place withholding schedules for the year commencing on 1 July 2015. That instrument is revoked by this instrument, and the withholding schedules in that instrument are replaced by those in this instrument.

 

 

 


Consultation

17. The making and publication of withholding schedules is a routine part of tax administration.

18. The ATO 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 software packages.

 

 

 

 

 

 

 

 

 

 

 

 

Steve Vesperman

Deputy Commissioner of Taxation

Date 17 June 2015

 

 

Legislative references:

Taxation Administration Act 1953

Legislative Instruments Act 2003

 


Statement of Compatibility with Human Rights

 

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

 

 

Taxation Administration Act Withholding Schedules 2015

 

 

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 makes publicly available withholding schedules updated in accordance with the Pay As You Go (PAYG) system. The schedules provide certainty to payers about withholding the correct amounts of tax on behalf of their payees, which then assists payees to meet their annual income tax liabilities.

 

Human rights implications

 

This legislative instrument does not engage any of the applicable rights or freedoms because the new instrument is of a routine nature. The schedules set out the amounts, formulas and procedures to be used for calculating the amount required to be withheld by entities from withholding payments.

 

Conclusion

 

This legislative instrument does not raise any human rights issues.

 

 

 

 

 

 

Overview

The Taxation Administration Act Withholding Schedules 2015, enacted by the Commissioner of Taxation under the authority of the Taxation Administration Act 1953, addresses the need for updated formulas and procedures for calculating the amount of tax to be withheld by entities under the Pay As You Go (PAYG) system. The PAYG system facilitates the collection of income tax and other levies, ensuring that taxpayers meet their obligations throughout the year rather than at the end. The withholding schedules are crucial for various stakeholders, including employers, employees, tax advisers, and software developers, as they provide the necessary guidance to ensure accurate withholding and timely payment of taxes. The instrument replaces the previous withholding schedules and ensures alignment with updated rates and thresholds applicable from 1 July 2015. The policy objective is to maintain the integrity and efficiency of the PAYG system, ensuring that taxpayers' obligations are met without undue burden, while supporting the government's revenue needs.

Scope and Application

The Taxation Administration Act Withholding Schedules 2015 sets out formulas and procedures for calculating the amounts to be withheld by entities under the Pay As You Go (PAYG) system, and applies from 1 July 2015. The withholding schedules are designed to assist entities in withholding the correct amounts of tax from payments made to individuals, thereby facilitating the collection of income tax, Medicare levy, Temporary Budget Repair levy, Higher Education Loan Program, Trade Support Loan, and Financial Supplement repayments. These schedules replace those in Legislative Instrument F2015L00750 and have been updated to reflect the rates and thresholds applicable from 1 July 2015. The instrument applies to employers, employees, professional tax advisers, payroll software developers, the Australian Taxation Office, and payroll service providers. The Commissioner of Taxation is empowered under section 15-25 of Schedule 1 to the Taxation Administration Act 1953 to make these withholding schedules, which are considered routine and have minor compliance costs.

Key Provisions

The Taxation Administration Act Withholding Schedules 2015 (sections 1 to 16) establishes the formulas and procedures to be used by entities for calculating the withholding amounts under the Pay As You Go (PAYG) system. These schedules detail how to withhold income tax, Medicare levy, Temporary Budget Repair levy, Higher Education Loan Program, Trade Support Loan and Financial Supplement repayments. The schedules are tailored to specific classes of payees and categories of payment, ensuring that the correct tax is withheld based on the payee's circumstances. The instrument applies from 1 July 2015 and replaces previous withholding schedules set out in Legislative Instrument F2015L00750. The withholding schedules impose obligations on entities to calculate and withhold the correct amounts from payments made to employees, contractors and other payees. Employers, payroll service providers, software developers and professional tax advisers must use the specified formulas and procedures to determine the withholding amounts. These schedules are crucial for ensuring that payees meet their annual tax liabilities and that the government receives the necessary revenue throughout the year. The Commissioner of Taxation, under section 15-25 of Schedule 1 to the TAA, is responsible for making these schedules publicly available to facilitate compliance. Failure to comply with the withholding schedules can lead to civil and criminal penalties. For instance, under section 287-10 of the TAA, a person who fails to withhold the correct amount of tax can be liable for a penalty equal to the amount of tax that should have been withheld. In more severe cases, deliberate or reckless disregard of withholding obligations may result in criminal charges. The maximum penalties can vary depending on the nature and extent of the non-compliance. Additionally, entities may face legal action from payees if incorrect withholding amounts result in tax shortfalls or overpayments, leading to financial penalties or interest charges.

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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.