Taxation Administration Act 1953 -
Tax table for back payments, commissions, bonuses and similar payments
Explanatory Statement
General Outline of Instrument
- This instrument is made by the Commissioner of Taxation (the Commissioner) pursuant to section 15-25 of Schedule 1 to the Taxation Administration Act 1953 (TAA).
- The instrument makes publicly available a withholding schedule, which the Commissioner is empowered to make, specifying the methods to be used for working out the amount required to be withheld by an entity from back payments, commissions, bonuses and similar payments in accordance with the pay as you go (PAYG) system.
- In making the instrument, the Commissioner has had regard to the rates of income tax specified in the Income Tax Rates Act 1986.
- This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
- This legislative instrument will revoke Legislative Instrument No. F2012L01068 registered on the 24th May 2012.
Date of effect
6. The instrument applies from 1 July 2013.
What is this instrument about?
7. The purpose of this instrument is to help employers and other payers calculate withholding on back payments, commissions, bonuses and similar payments. This will assist taxpayers in meeting their annual income tax liabilities. The system for collecting withholding amounts is called the PAYG system.
8. This instrument provides information on how to work out the amount an entity must withhold from back payments, commissions, bonuses and similar payments paid to individual taxpayers. The information is contained in the schedule to the instrument. The schedule is also known as a withholding schedule.
9. The schedule has been revised as a result of community feedback to improve clarity of information on the schedule.
What is the effect of this Instrument?
10. The effect of this instrument is to support the PAYG withholding system, which provides a simple and convenient way for most people to meet their annual tax obligations as income is earned.
11. The people who find the information most useful are employers, employees, professional advisers, software developers, the Australian Taxation Office, electronic payroll stockists, electronic payroll producers and payroll service providers.
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 PAYG arrangements, introduced in A New Tax System (Pay As You Go) Act 1999, represent the most effective, simple and convenient way for most people to meet their annual income tax liability, either through instalments or withholding, as income is earned. They eliminate large end-of-year tax bills and ensure that Government has the revenue it needs during the year to provide benefits and services to the community.
14. The TAA empowers the Commissioner to make withholding schedules, specifying the amounts, formulas and procedures to be used for working out the amount required to be withheld by an entity. The TAA requires the Commissioner to make each withholding schedule publicly available.
15. Each withholding schedule is tailored to meet the circumstances of a particular class of employee or class of payments made.
Consultation
16. The making and publication of withholding schedules is a routine part of tax administration.
17. The ATO will provide the necessary information to payroll and software providers, and those employers who code their own in-house payroll systems, to ensure that they have sufficient time to update their software packages.
Erin Holland
Deputy Commissioner of Taxation
Date 5 April 2013
Legislative references:
Taxation Administration Act 1953
Legislative Instruments Act 2003
Income Tax Rates Act 1986
A New Tax System (Pay As You Go) Act 1999
Human Rights (Parliamentary Scrutiny) Act 2011
Statement of Compatibility with Human Rights
This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Taxation Administration Act 1953- Tax tables for back payments, commissions, bonuses and similar payments
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.
Overview
This Legislative Instrument makes publicly available a withholding schedule, which specifies the methods to be used for working out amounts required to be withheld for back payments, commissions, bonuses and similar payments in accordance with the pay as you go (PAYG) system.
Human rights implications
This legislative instrument does not engage any of the applicable rights or freedoms because the new instrument is of a minor or machinery nature.
Conclusion
This legislative instrument is compatible with human rights as it does not raise any human rights issues.
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Erin Holland
Deputy Commissioner of Taxation
Date 5 April 2013