Australian Taxation Office
Taxation Administration Act 1953
Variation of amount required to be withheld
I, Megan Elizabeth Yong, Assistant Commissioner of Taxation, vary the amount required to be withheld as described below from withholding payments that are:
- covered by subdivision 12-B (Payments for work and services) of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953); and
- within the class of cases described below.
I make this variation of the amount required to be withheld under the power contained in section 15-15 of Schedule 1 to the TAA 1953 to meet the special circumstances of that class of cases.
Class of cases
Payments covered by subdivision 12-B of Schedule 1 to the TAA 1953, where
(i) part of the payment is paid, or is to be paid, as a donation to a deductible gift recipient specified or endorsed under Division 30 of Income Tax Assessment Act 1997 (ITAA 1997) by a payer;
(ii) the donation is paid to the deductible gift recipient by the payer of the withholding payment at the direction of the payee;
(iii) the donation is made under a regular planned giving arrangement; and
(iv) the payee has not advised the payer that they do not want a variation to the amount withheld.
Amount Required to be withheld
In working out how much a payer is required to withhold under the withholding schedules (known as the PAYG tax tables), a payer may disregard so much of a withholding payment (covered by subdivision 12-B of Schedule 1 to the TAA 1953) that is paid to a deductible gift recipient by the payer on behalf of the payee.
A deductible gift recipient is defined in section 995-1 of the ITAA 1997 to take its meaning from section 30-227 of the ITAA 1997.
Effective for payments made after 1 July 2002
This variation is effective for payments made on or after 1 July 2002.
Signed at Sydney, this 28th day of June 2002
Signed by Megan Yong
Assistant Commissioner of Taxation
Overview
The Taxation Administration Act 1953 (TAA 1953) serves as a foundational piece of legislation regulating the administration of taxation in Australia. It was enacted to provide a comprehensive framework for the collection and enforcement of taxes, ensuring that the Australian Taxation Office (ATO) could effectively manage taxpayer obligations and compliance. One of the gaps it aimed to address was the need for flexibility in the application of withholding tax rates to better accommodate specific circumstances, such as those involving charitable donations. Pursuant to the TAA 1953, the Assistant Commissioner of Taxation, Megan Elizabeth Yong, has issued a legislative instrument to vary the withholding amount for certain payments under subdivision 12-B of Schedule 1. This variation aims to meet the special circumstances where part of the payment is designated as a donation to a deductible gift recipient, as defined under Division 30 of the Income Tax Assessment Act 1997 (ITAA 1997). The policy objective is to ensure that the withholding tax calculations appropriately reflect the nature of such payments, thereby aiding compliance and simplifying the process for taxpayers involved in regular planned giving arrangements. This legislative instrument is effective for payments made on or after 1 July 2002.
Scope and Application
The Taxation Administration Act 1953, as varied by Megan Elizabeth Yong, Assistant Commissioner of Taxation, pertains to the withholding of payments made under subdivision 12-B, which includes payments for work and services. This variation applies to payments where a portion is designated as a donation to a deductible gift recipient as defined under Division 30 of the Income Tax Assessment Act 1997. The donations must be made at the direction of the payee, as part of a regular planned giving arrangement, and the payee must not have objected to the withholding variation. The variation allows payers to disregard a portion of the withholding payment when determining the amount to withhold, specifically the part paid to the deductible gift recipient. This amendment is effective for payments made on or after 1 July 2002, applying nationally across Australia under the Commonwealth's legislative authority.
Key Provisions
The Taxation Administration Act 1953 (TAA 1953) has been varied to adjust the amount of withholding tax that must be withheld from certain payments for work and services (section 12-B of Schedule 1 to the TAA 1953). This variation applies to payments made by a payer to a deductible gift recipient at the direction of the payee, where the donation is part of a regular planned giving arrangement and the payee has not opted out of the variation (section 15-15). Specifically, payers may disregard a portion of the withholding payment when calculating the tax to withhold if the payment is made to a deductible gift recipient as a donation on behalf of the payee (section 15-15).
The obligations under this variation require payers to identify if the payment falls within the specified class of cases. This includes verifying that the payment is made to a deductible gift recipient as a donation at the payee’s direction, falls under a regular planned giving arrangement, and the payee has not communicated their objection to the variation (section 12-B of Schedule 1 to the TAA 1953). Payers must then disregard the specified portion of the payment when calculating the withholding tax using the PAYG tax tables (section 15-15). It is also the responsibility of the payer to ensure that the variation is applied correctly and consistently across all applicable payments.
Failure to comply with the obligations and requirements set forth in this variation of withholding tax can lead to legal consequences. The TAA 1953 outlines the penalties for non-compliance, which can include fines and other administrative actions. The specific penalties for breaches depend on the nature and severity of the non-compliance but can be substantial. The maximum penalties for serious breaches are set out in the TAA 1953 and can include fines of up to several thousand Australian dollars, depending on the specific circumstances of the breach. Additionally, ongoing non-compliance can result in further enforcement actions by the Australian Taxation Office.