Taxation Administration Act 1953 - PAYG Withholding - Payment summary deferral - Employment termination and departing Australia superannuation payments (02/03/2012)

Explanatory Statement

General Outline of Instrument

1. This instrument defers the due date for providing the Commissioner with copies of payment summaries in respect of employment termination payments or departing Australia superannuation payments until 14th August following the end of the financial year in which the payments are made.
2. This instrument is made by the Commissioner of Taxation (the Commissioner) pursuant to section 388-55 of Schedule 1 to the Taxation Administration Act 1953.
3. This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
4. This legislative instrument will revoke Legislative Instrument No. F2006B11584 registered on the 16th November 2006.

Date of effect

5.      The instrument commences on the day after it is registered on the Federal Register of Legislative Instruments.

What is this instrument about?

6.      Legislative Instrument No. F2006B11584 registered on the 16th November 2006 provided an exemption from the requirement to provide copies of payment summaries to the Commissioner within 14 days of making eligible termination payments and departing Australia superannuation payments.

7.      Eligible termination payments were replaced by employment termination payments effective from 1 July 2007. This instrument updates the previous instrument to use the correct terminology. This instrument also replaces the exemption with a deferral until 14th August following the end of the financial year in which the payments are made.

8.      Section 16-165 (1) (b) and section 16-166 (b) of Schedule 1 to the Taxation Administration Act 1953 require a copy of the payment summary relating to these payments to be provided to the Commissioner within 14 days of making the payments.

9.    This short timeframe is not required for efficient administration and places an unnecessary burden on employers and other payers.

10.  This instrument defers the due date for providing the payment summary until 14 August following the end of the financial year in which the payments are made, which aligns with the payer’s other reporting obligations.

What is the effect of this instrument?

11.  As a result of this instrument, payers are not required to give copies of payment summaries to the Commissioner within 14 days of making employment termination payments or departing Australia superannuation payments where they have withheld amounts from payments in accordance with Subdivision 12-C, section 12-85 or Subdivision 12-FA, section 12-305. They are however required to provide copies but within a timeframe aligned with their other reporting obligations.

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 minor or machinery nature.

Background:

13.  The previous Legislative Instrument No. F2006B11584 registered on the 16th November 2006 provided payers with an exemption from providing the Commissioner with copies of payment summaries within 14 days of making an eligible termination payments or departing Australia superannuation payments. This legislative instrument uses the current terminology of ’employment termination payments’ in respect of payments made because of termination of employment.

14.  Also, as a consequence of this instrument, the exemption is removed and replaced by a deferral until a due date aligned with the payers other reporting obligations.

Statement of compatibility with Human Rights

15.  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. Accordingly, in the ATO’s assessment, this legislative instrument is compatible with human rights.

Consultation:

16.  No consultation has been conducted as the affect of the instrument is to update the existing legislative instrument to minimise any confusion for the community concerning the payments covered or the requirement to provide copies.

Erin Holland

Deputy Commissioner of Taxation

Legislative references:

Taxation Administration Act 1953

Legislative Instruments Act 2003

Human Rights (Parliamentary Scrutiny) Act 2011