Pay As You Go (PAYG) Withholding
Variation of amount required to be withheld
I, Michael Joseph Carmody, Commissioner of Taxation, vary to nil the amount required to be withheld from withholding payments that are:
- covered by Subdivision 12-B (except section 12-55), 12C or 12D in Schedule 1
to the Taxation Administration Act 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 Taxation Administration Act 1953 to meet the special circumstances of that class of cases.
Effective for payments made on or after 1 July 2000
This variation applies to payments made on or after 1 July 2000.
Class of cases
The class of cases consists of those cases where all of the following 3 conditions are satisfied:
- An entity pays amounts to an individual who is under 18 years of age;
- The individual has not provided the entity with a TFN declaration that is in effect;
- The amounts paid by the entity to the individual do not exceed:
- where the entity pays the individual weekly: $112; or
- where the entity pays the individual fortnightly: $225; or
- where the entity pays the individual monthly: $489.
The threshold amounts apply whether or not the individual is entitled to annual leave loading.
Signed at Canberra, this 28th day of June 2000.
Signed by Michael Carmody
Commissioner of Taxation
Overview
The Pay As You Go (PAYG) Withholding Variation of amount required to be withheld legislative instrument was introduced in 2000 to address the issue of income tax withholding for payments made to individuals under 18 years of age who do not have a Tax File Number (TFN) declaration. Enacted by the Commissioner of Taxation, Michael Joseph Carmody, the instrument aims to alleviate the administrative burden on entities making payments to minors without a TFN. This legislative instrument modifies the amount required to be withheld under the Taxation Administration Act 1953 to zero for specified payments, provided that the payments meet certain conditions regarding frequency and amount. This measure is designed to cater to the special circumstances of entities dealing with minors, ensuring that they are not subject to unnecessary withholding obligations.
Scope and Application
This legislative instrument pertains to the variation of the Pay As You Go (PAYG) withholding amounts required by entities from payments made to individuals under the age of 18. The variation applies to specific cases under Subdivision 12-B (excluding section 12-55), 12C, and 12D of Schedule 1 to the Taxation Administration Act 1953. The scope of the variation is limited to payments made on or after 1 July 2000, where the payment is made by an entity to an individual who has not provided a Tax File Number (TFN) declaration, and the amounts paid fall below specified thresholds. The thresholds are $112 for weekly payments, $225 for fortnightly payments, and $489 for monthly payments, irrespective of annual leave loading. This variation aims to address special circumstances by reducing the withholding amount to nil, thereby potentially easing the financial burden on entities when making payments to minors without a TFN declaration, within the stipulated limits.
Key Provisions
The legislative instrument F2006B00403 (Legislative instrument) primarily modifies the amount required to be withheld under PAYG withholding provisions for certain payments. Specifically, section 15-15 of Schedule 1 to the Taxation Administration Act 1953 is invoked to vary the withholding amount to nil for payments covered by Subdivisions 12-B (excluding section 12-55), 12C, and 12D, provided they fall within the class of cases described. The variation is effective for payments made on or after 1 July 2000. This class of cases pertains to payments made by an entity to an individual under 18 years of age, where the individual has not provided a TFN declaration in effect, and the payments do not exceed certain thresholds depending on the frequency of payment: $112 weekly, $225 fortnightly, or $489 monthly. These thresholds apply irrespective of whether the individual is entitled to annual leave loading.
The obligations imposed by this legislative instrument on entities paying individuals under 18 years of age are relatively straightforward. Entities must ensure that the individual has provided a TFN declaration in effect to avoid the need for withholding. If the individual is under 18 and has not provided a TFN declaration, the entity must withhold tax according to the standard PAYG withholding rules unless the payment falls within the specified class of cases. In those specific cases, no withholding is required, provided the payment thresholds are not exceeded. Entities must also maintain records to substantiate their compliance with these requirements, such as evidence of the age of the individual and the amounts paid.
Failure to comply with the PAYG withholding requirements set out in this legislative instrument may result in various consequences. For instance, if an entity fails to withhold tax when required or incorrectly claims that a payment falls within the specified class of cases, they may be liable for the unpaid tax. Additionally, penalties may apply. The penalties can include a significant fine, with the exact amount determined by the severity and frequency of the breach. In severe cases, the entity may also face criminal charges, which could result in further financial penalties and potential imprisonment for responsible individuals. It is essential for entities to understand and adhere to these obligations to avoid such repercussions.