Taxation Administration Act 1953 - Tax table for back payments, commissions, bonuses and similar payments

Administered by Department of the Treasury

Legislation au F2012L01068 Not in force Legislative Instrument

Legislation content

Taxation Administration Act 1953 -
Tax table for back payments, commissions, bonuses and similar payments

Explanatory Statement

 

General Outline of Instrument

  1. 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).
  2. 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.
  3. In making the instrument, the Commissioner has had regard to the rates of income tax specified in the Income Tax Rates Act 1986.
  4. This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

Date of effect

5.     The instrument applies from 1 July 2012.

 

What is this instrument about?

6.     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.

7.     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.

8.     The withholding schedule consolidates three withholding schedules:

  • Tax table for back payments
  •  Tax table for commissions and
  •  Tax table for bonuses and similar payments.

The consolidation of these withholding schedules standardises the methods to calculate withholding on these payments, and provides a single product which employers and other payers may use.

 

What is the effect of this Instrument?

9.     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.

10. 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.

11. This instrument also withdraws the three withholding schedules currently being used to provide certainty to PAYG withholding payers with regard to their withholding obligations from back payments, commissions, bonuses and similar payments.

12. An assessment of the compliance cost impact indicates that the impact will be minimal for both implementation and on-going compliance costs. The instrument is routine in 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 employees 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.

Human Rights Compatibility

18. This 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.

 

Erin Holland

Deputy Commissioner of Taxation

Date 21 May 2012

 

 

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

 

 

 

Overview

The Taxation Administration Act 1953 is an important piece of legislation that was enacted to streamline the administration of taxation laws in Australia. In 2012, the Commissioner of Taxation introduced a legislative instrument, F2012L01068, to address the need for a standardised method of calculating withholding on back payments, commissions, bonuses, and similar payments under the Pay As You Go (PAYG) system. This instrument, made under section 15-25 of Schedule 1 to the Taxation Administration Act 1953, provides a consolidated withholding schedule to assist employers and other payers in accurately determining the amount of tax to withhold from these payments. The policy objective of this instrument is to support the PAYG withholding system, which ensures that taxpayers meet their annual income tax liabilities conveniently as their income is earned, thereby supporting government revenue collection and eliminating large end-of-year tax bills.

Scope and Application

The Taxation Administration Act 1953 - Tax table for back payments, commissions, bonuses and similar payments is a legislative instrument created by the Commissioner of Taxation under section 15-25 of Schedule 1 to the Taxation Administration Act 1953. Its primary purpose is to provide a withholding schedule to assist employers and other payers in calculating the amount of tax to withhold from back payments, commissions, bonuses, and similar payments made to individual taxpayers, thereby supporting the Pay As You Go (PAYG) withholding system. This system is designed to help taxpayers meet their annual income tax liabilities in a simple and convenient manner as their income is earned. The instrument consolidates three previously separate withholding schedules into one, streamlining the calculation process for employers, employees, professional advisers, software developers, and other relevant parties. It applies from 1 July 2012 and is made in accordance with the rates of income tax specified in the Income Tax Rates Act 1986. The instrument is routine in nature and is compatible with human rights as recognised in international instruments, ensuring minimal compliance costs for those affected.

Key Provisions

The main operative sections of this instrument (sections 9 to 12) detail the consolidation of three withholding schedules into one, called the withholding schedule, which is now publicly available. This schedule provides a standardised method for calculating the amount to be withheld from back payments, commissions, bonuses and similar payments made to individual taxpayers, in accordance with the pay as you go (PAYG) system. The instrument also withdraws the previously existing withholding schedules for back payments, commissions and bonuses, providing certainty to employers and other payers regarding their withholding obligations. The obligations imposed by the Act on the parties it governs include ensuring that the correct amount of withholding tax is calculated and remitted to the Commissioner of Taxation in relation to back payments, commissions, bonuses and similar payments. Employers and other payers are required to use the withholding schedule to determine the amount of tax to withhold from these payments. This is intended to assist taxpayers in meeting their annual income tax liabilities and 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. There are no explicit offences, penalties, or civil/criminal consequences outlined in the Explanatory Statement for breaches of this instrument. However, non-compliance with the PAYG withholding obligations can result in penalties and interest on the unpaid tax. The Australian Taxation Office (ATO) may impose penalties for failure to withhold the correct amount of tax, failure to lodge payment summaries or activity statements, or failure to pay the withheld tax to the Commissioner. The penalties can vary depending on the nature and extent of the non-compliance, and can include fines and interest on the unpaid tax. It is important for employers and other payers to understand their obligations under the PAYG withholding system and to ensure that they comply with the requirements to avoid potential penalties and interest charges.

Legal classification tags

Area of Law
Taxation Law
Instrument
Statutory Instrument
Concepts
Definitions & Interpretation
Compliance Obligations
Reporting & Disclosure Obligations
Enforcement Powers

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.