Notice exempting entities from giving a duplicate copy of a payment summary to payees - Legislative Instrument
Explanatory Statement
General Outline of Instrument
This instrument is a notice exempting entities from providing employees and other payees with a duplicate copy of a pay as you go (PAYG) withholding payment summary for particular types of payments subject to PAYG withholding.
The instrument is made under section 16-180(1) of Schedule 1 to the Taxation Administration Act 1953.
The proposed instrument would be a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Date of effect
This instrument applies from 1 May 2007.
What is this instrument about:
The purpose of the notice is to remove the requirement for payers of withholding payments to provide payees with a duplicate copy of a payment summary where the payments are covered under Subdivisions 12-B (except sections 12-55 and 12-60), 12-C (except section 12-85) and 12-D of Schedule 1 to the Taxation Administration Act 1953.
What is the effect of this instrument:
The effect of the instrument is that payers will only be required to provide one original copy of the PAYG payment summary – individual non-business (NAT 0046) for the majority of their payees.
Background:
The requirement to provide both an original and a duplicate copy of the payment summary was put in place so that the payees were able to attach the original version to their annual income tax return and retain the duplicate copy for their personal records.
The majority of taxpayers now lodge their tax returns electronically and they are not required to provide a payment summary copy to the Tax Office. The Tax Office is able to use information reported directly from the employer or payer to check the amounts included in the tax return. There is no longer any justification for requiring those taxpayers who lodge paper tax return forms to attach a copy of their payment summary and this requirement will be removed from 2007.
In the circumstances, it is no longer necessary to compel employers and other payers to provide a duplicate copy to their payees.
Consultation:
No consultation has been conducted in respect of this instrument as its effect is to remove an unnecessary obligation from the community.
Deputy Commissioner of Taxation
16 April 2007
Previous draft:
N/A
Related Rulings/Determinations:
Taxation Determination 2001/10
Previous Rulings/Determinations:
N/A
Subject references:
PAYG payment summary
Pay as you go
PAYG withholding
Legislative references:
Subdivision 12-B (except 12-55 and 12-60)
Subdivision 12-C (except 12-85)
Subdivision 12-D
Section 16-180 of Schedule 1 to the Taxation Administration Act 1953
ATO references
Overview
The Notice exempting entities from giving a duplicate copy of a payment summary to payees, F2007L01196, was enacted in 2007 and addresses the problem of unnecessary administrative burden on taxpayers and payers. This legislative instrument, issued under section 16-180 of Schedule 1 to the Taxation Administration Act 1953 by the Deputy Commissioner of Taxation, aims to simplify the tax reporting process by removing the requirement for employers and payers to provide a duplicate copy of the PAYG withholding payment summary. This change recognises the shift towards electronic tax returns and the ability of the Australian Taxation Office to directly access payment summary information from employers, thus making the duplicate copy redundant for most taxpayers.
The policy objective of this legislative instrument is to alleviate administrative burdens by streamlining the payment summary process for the majority of taxpayers who now lodge their tax returns electronically. By exempting entities from providing duplicate copies of payment summaries, the instrument seeks to modernise the tax system to better accommodate the digital age while ensuring that taxpayers still receive the necessary documentation for their personal records. This measure reflects an effort to enhance efficiency and convenience for both taxpayers and payers.
Scope and Application
The legislative instrument in question is a notice exempting entities from the obligation of providing a duplicate copy of a payment summary to payees for specific types of payments subject to pay-as-you-go (PAYG) withholding. This notice applies to entities that are payers of withholding payments, including employers, businesses, and other organisations obligated to withhold tax at source. The instrument operates within the jurisdictional scope of the Commonwealth of Australia, made under section 16-180(1) of Schedule 1 to the Taxation Administration Act 1953. The exemption applies to payments covered under Subdivisions 12-B (excluding sections 12-55 and 12-60), 12-C (excluding section 12-85), and 12-D of Schedule 1 to the Taxation Administration Act 1953. The notice exempts payers from providing a duplicate copy of the payment summary, reducing the administrative burden on them while ensuring that payees still receive an original copy necessary for their tax return purposes. The instrument is effective from 1 May 2007, aiming to streamline the process of tax reporting and reduce unnecessary administrative obligations for both payers and payees.
Key Provisions
The key operative sections of this legislative instrument (section 16-180) exempt certain entities from the requirement of providing a duplicate copy of a payment summary to payees for specific types of payments under Subdivisions 12-B (except sections 12-55 and 12-60), 12-C (except section 12-85), and 12-D of Schedule 1 to the Taxation Administration Act 1953. This means that payers are no longer required to provide a duplicate copy of the PAYG withholding payment summary to their payees for these particular types of payments. Instead, they will only need to provide a single original copy of the payment summary.
The instrument imposes obligations on payers to ensure they comply with the notice by providing only one original copy of the PAYG payment summary to their payees for the specified types of payments. Payers must ensure that they are aware of the exemptions provided by this instrument and apply them correctly when preparing payment summaries for their payees. The payers should be mindful of the specific exclusions and ensure that they do not inadvertently provide a duplicate copy of the payment summary for the exempted types of payments.
There are no direct offences or penalties associated with breaching the requirements of this instrument. However, failure to comply with the notice may result in incorrect payment summaries being provided to the Australian Taxation Office (ATO) and the payees, which could potentially lead to discrepancies in the payees' tax returns and assessments. In such cases, the ATO may contact the payer to rectify the issue and ensure compliance with the notice. Additionally, if a payer consistently fails to comply with the notice, it may result in the ATO taking enforcement action against the payer, which could include fines or other administrative penalties.
This instrument aims to simplify the PAYG withholding system and reduce unnecessary administrative burdens on payers and payees. By removing the requirement to provide a duplicate copy of the payment summary for certain types of payments, the instrument aligns with the shift towards electronic tax return lodging and the ATO's ability to access payment information directly from payers. It is important for payers to stay informed about the provisions of this instrument and ensure they are complying with the notice to avoid any potential issues with their payees or the ATO.