Australian Taxation Office Legislative Instrument
Instrument ID 2010/MEI/0017
Taxation Administration Act
Occasional payroll donations to deductible gift recipients No. 2
Explanatory Statement
General Outline of Instrument
- This instrument enables a variation to the amount of withholding required by a payer under the pay as you go withholding system for payees who make donations to a deductible gift recipient under an occasional workplace giving arrangement implemented by their payer.
- This instrument is made by the Commissioner of Taxation (the Commissioner) pursuant to section 15-15 of Schedule 1 to the Taxation Administration Act 1953.
- This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
- This legislative instrument will revoke Legislative Instrument No. F2009L01143 registered on the 23rd March 2009.
Date of effect
5. The instrument commences on the day after it is registered on the Federal Register of Legislative Instruments.
6. It provides a variation to the amount of withholding required from payments made after the date the instrument is registered.
What is this instrument about?
7. This instrument varies the amount required to be withheld by a payer who makes donations to a deductible gift recipient at the direction of a payee where the variation for donations made under a regular planned workplace giving arrangement would not apply.
8. As a result, the person making the donation will receive the taxation benefit of the deductible gift at the time of making the donation, rather than waiting until their tax assessment for the relevant year.
What is the effect of this instrument?
9. The instrument is a pay as you go withholding class variation that reduces the amount of withholding by a payer for the relevant payees for the pay period in which the donation is made. It has been developed to enable a more accurate withholding calculation for occasional donations.
10. This instrument is provided to allow payers wishing to facilitate a program for making donations at the direction of their payees where those donations are not made under a regular planned giving arrangement.
11. This instrument provides updated withholding instructions that reflect the personal income tax rates and thresholds that apply from 1 July 2010.
Background:
An earlier pay as you go withholding class variation (Legislative Instrument Ref: F2006B00300 - registered on the 10th February 2006 ) provides a reduction in withholding when payers make donations at the direction of payees under a regular planned workplace arrangement.
12. Last year’s Victorian bushfires disaster resulted in a demand from payers and payees to provide similar assistance when donations are made to deductible gift recipients through payroll systems under occasional workplace giving arrangements such as making a one-off donation.
13. The earlier class variation does not apply to donations made outside a regular planned giving arrangement.
Consultation:
14. The need for this instrument was identified by payers wishing to make donations at the direction of their employees following last year’s Victorian bushfires disaster. Requests for variations received from various payers were actioned on a case by case basis.
15. No further consultation has been conducted as the affect of the instrument is to provide an immediate taxation benefit for payees who direct their payers to make donations that are not made under a regular planned giving arrangement.
16. This instrument has been subject to a cost compliance calculation as recommended by the Office of Best Practice and Regulation. An assessment of the compliance cost impact indicates that the impact will be low for implementation and there will be no change in on-going compliance costs. The instrument is routine in nature.
Erin Holland
Deputy Commissioner of Taxation
10th December 2010
Legislative references:
Taxation Administration Act 1953
Legislative Instruments Act 2003
Overview
The Taxation Administration Act 1953, enacted by the Australian Parliament, provides the legal framework for tax administration in Australia. One of the legislative instruments introduced under this Act is the "Occasional payroll donations to deductible gift recipients No. 2," which was designed to address the issue of inaccurate withholding calculations for donations made by employees through occasional workplace giving arrangements. This instrument, made by the Commissioner of Taxation pursuant to section 15-15 of Schedule 1 to the Act, enables a variation to the withholding amount for payees who make donations to deductible gift recipients under such arrangements. The policy objective is to provide a more immediate taxation benefit to the payees by reducing the withholding amount for these donations, ensuring they receive the benefit at the time of donation rather than waiting for their annual tax assessment. This instrument ensures updated withholding instructions reflecting the personal income tax rates and thresholds from 1 July 2010, thus offering a more accurate withholding calculation for occasional donations.
Scope and Application
The Taxation Administration Act 2010 Occasional Payroll Donations to Deductible Gift Recipients No. 2 instrument applies to payers and payees engaged in the process of making donations to deductible gift recipients through payroll systems under occasional workplace giving arrangements. This includes entities such as businesses and their employees who are involved in the facilitation of such donations, where these donations are not part of a regular planned giving arrangement. The geographic reach of this legislation is national, applying across Australia under the Commonwealth's purview. This instrument excludes regular planned giving arrangements, which are governed by a different withholding variation. The application of this Act extends through subordinate instruments that provide updated withholding instructions reflecting the personal income tax rates and thresholds effective from 1 July 2010. The instrument's purpose is to allow payers to facilitate programs for making donations directed by their employees for occasional donations, thereby providing immediate taxation benefits to the payees involved.
Key Provisions
This legislation, F2010L03246, outlines a variation to the withholding amount required by a payer under the pay-as-you-go withholding system for payees who make donations to deductible gift recipients via occasional workplace giving arrangements. This change allows the payee to immediately receive the tax benefit of their donation, rather than waiting for their tax assessment at the end of the year (sections 7-10). The legislation is designed to accommodate payers who wish to facilitate a program for donations at the direction of their payees, but who are not operating under a regular planned giving arrangement. This variation applies to payments made after the instrument is registered on the Federal Register of Legislative Instruments.
The obligations imposed by this Act require payers to adjust the amount of withholding for payees who make occasional donations to deductible gift recipients. This adjustment ensures that the payer withholds the correct amount of tax from the payee's salary to account for the donation, thus enabling the payee to claim the donation as a tax deduction at the time of the payment rather than waiting for their annual tax assessment (section 10). Payers must follow the updated withholding instructions provided by this Act to ensure compliance with the tax law and to enable payees to receive the tax benefit of their donation promptly.
The Act does not explicitly state any criminal or civil penalties for non-compliance. However, failure to comply with the withholding instructions could result in the payer being liable for the unpaid tax on the donation, as well as potential interest and penalties for late payment or underpayment of withholding tax. The payer may also face administrative action by the Australian Taxation Office if they fail to correctly implement the withholding variation. The maximum penalties for such breaches would be in accordance with the general provisions of the Taxation Administration Act 1953 and the Income Tax Assessment Act 1997, which could include fines and interest on the unpaid tax.