Taxation Administration Act 1953 - Tax table for employment termination payments

Administered by Department of the Treasury

Legislation au F2012L01427 Not in force Legislative Instrument

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Taxation Administration Act 1953 -
Tax table for employment termination 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 the employment termination payment withholding schedule, which the Commissioner is empowered to make, specifying the amounts, formulas and procedures to be used for working out the amount required to be withheld by an entity from employment termination payments in accordance with the pay as you go (PAYG) withholding system.
  3. In making the instrument, the Commissioner has had regard to the Income Tax Rates Act 1986 and the Tax Laws Amendment (2012 Measures No. 3) Act 2012.
  4. The instrument contains one withholding schedule. The schedule provides information for calculating the withholding amount from employment termination payments.
  5. This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

Date of effect

6.     The instrument applies from 1 July 2012.

7.     It provides for PAYG withholding on employment termination payments made on or after 1 July 2012 based on the Income Tax Rates Act 1986 and the Tax Laws Amendment (2012 Measures No. 3) Act 2012.

 

What is this instrument about?

8.     The instrument provides information explaining how to work out the amount an entity must withhold from payments made to individual taxpayers who are paid an employment termination payment. The information is contained in the schedule attached to the instrument, also known as a withholding schedule.

 

What is the effect of this Instrument?

9.     The effect of the 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 information contained in the instrument is most useful to 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 earlier version of the affected withholding schedule to provide certainty to PAYG withholding payers with regard to their withholding obligations.

12. An assessment of the compliance cost impact indicates that the instrument will affect only a small proportion of businesses and confirms existing practice. There is no ongoing compliance cost impact and a low implementation impact reflecting the need for some taxpayers to be aware of the change and make some minor adjustments to their processes. 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 employee or payment type.

 

Consultation

16. The making and publication of withholding schedules is a routine part of tax administration.

17. The Australian Taxation Office 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.

 

Statement of Compatibility with Human Rights prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

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.

 

Overview

19.  This instrument contains one withholding schedule. The schedule provides information for calculating the withholding amount from employment termination payments.

 

Human rights implications

20. This legislative instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

21. This legislative instrument is compatible with human rights as it does not raise any human rights issues.

 

 

Erin Holland

Deputy Commissioner of Taxation

28 June 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

Tax Laws Amendment (2012 Measures No 3) Act 2012

 

 

 

Overview

The Taxation Administration Act 1953, enacted by the Parliament of Australia, provides the framework for the administration of taxation laws. It empowers the Commissioner of Taxation to create legislative instruments that assist in the efficient collection of taxes, including the withholding of taxes from payments such as employment terminations. The Tax table for employment termination payments instrument, made under section 15-25 of Schedule 1 to the TAA, was introduced to provide a clear and publicly available withholding schedule for employment termination payments, ensuring that entities can accurately calculate the amount of tax to withhold from such payments in accordance with the PAYG withholding system. The instrument, which came into effect on 1 July 2012, aims to support the PAYG system by offering a straightforward method for taxpayers to meet their annual tax obligations as income is earned, thereby aiding in the timely collection of tax revenue by the government.

Scope and Application

The Taxation Administration Act 1953 - Tax table for employment termination payments is a legislative instrument made by the Commissioner of Taxation under section 15-25 of Schedule 1 to the TAA. It is designed to make publicly available the employment termination payment withholding schedule, which specifies the amounts, formulas, and procedures to be used for working out the withholding amount required by an entity from employment termination payments in accordance with the PAYG withholding system. The instrument applies from 1 July 2012 and provides for PAYG withholding on employment termination payments made on or after this date, based on the Income Tax Rates Act 1986 and the Tax Laws Amendment (2012 Measures No. 3) Act 2012. The withholding schedule contained in this instrument is intended to support the PAYG withholding system, offering a simple and convenient way for most people to meet their annual tax obligations as income is earned. This instrument is most useful to employers, employees, professional advisers, software developers, the Australian Taxation Office, electronic payroll stockists, electronic payroll producers, and payroll service providers. It also withdraws the earlier version of the affected withholding schedule to provide certainty to PAYG withholding payers with regard to their withholding obligations. The instrument is compatible with human rights as it does not raise any human rights issues.

Key Provisions

The key sections of this instrument, made under section 15-25 of the Taxation Administration Act 1953 (TAA), provide a withholding schedule for employment termination payments (paragraph 8). The schedule specifies the amounts, formulas, and procedures to be used for calculating the amount required to be withheld by an entity from employment termination payments in accordance with the pay as you go (PAYG) withholding system (paragraphs 8 and 15). This instrument, which applies from 1 July 2012 (paragraph 6), is designed to support the PAYG withholding system and to provide clear guidance on withholding obligations for these payments, as outlined in the Income Tax Rates Act 1986 and the Tax Laws Amendment (2012 Measures No. 3) Act 2012 (paragraph 7). The Act imposes obligations on entities, such as employers, to withhold the correct amount from employment termination payments made to individual taxpayers. These entities must follow the withholding schedule to determine the appropriate withholding amount based on the income tax rates in effect at the time of payment (paragraph 8). The schedule provides a clear set of instructions and calculations to ensure that the correct amount is withheld and remitted to the Australian Taxation Office (ATO) in accordance with the PAYG withholding system (paragraph 9). Breach of the withholding obligations can result in civil and criminal consequences. Entities that fail to withhold the correct amount may be subject to penalties under the TAA. The penalties can include fines and interest on any underpaid withholding amounts (paragraphs 10 and 11). Additionally, if the failure to withhold is found to be wilful or negligent, the responsible individuals may face criminal charges, which could lead to imprisonment (paragraph 11). The maximum penalties are not explicitly stated in the instrument, but they are typically detailed in the relevant sections of the TAA and other related legislation.

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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.