Taxation Administration Act 1953 - Withholding Schedules 2010

Administered by Department of the Treasury

Legislation au F2010L01472 Not in force Legislative Instrument

Select Document

Taxation Administration Act
Withholding Schedules 2010

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 the withholding schedules, 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 in accordance with the pay as you go (PAYG) system.
In making the instrument, the Commissioner has had regard to the Income Tax Rates Act 1986 and relevant amendments contained in the Tax Laws Amendment (Personal Income Tax Reduction) Act 2008.
The instrument contains 28 withholding schedules based on the threshold changes contained in the Tax Laws Amendment (Personal Income Tax Reduction) Act 2008. Each schedule provides information for calculating the withholding amount, taking into account the particular circumstances presented in the schedule.
This is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Date of effect

6. The instrument applies from 1 July 2010.

7. It provides for PAYG withholding on or after 1 July 2010 based on threshold changes contained in the Tax Laws Amendment (Personal Income Tax Reduction) Act 2008.

What is this instrument about?

8. The purpose of this instrument is to help taxpayers meet their annual income tax liability. They are required to pay amounts of their income at regular intervals as it is earned during the year. The system for collecting these amounts is called the PAYG system.

9. When a change in income tax rates or thresholds is made, the Commissioner prepares and publishes a new set of withholding schedules to notify the community of the amounts, formulas and procedures to be used for calculating the amount required to be withheld by an entity from a withholding payment. The withholding schedules facilitate the efficient collection of income tax, Medicare levy, Higher Education Loan Program and Financial Supplement repayments.

10. This instrument provides information on how to work out the amount an entity must withhold from payments to individual taxpayers. The information is contained in the schedules to the instrument, also known as withholding schedules.

What is the effect of this Instrument?

11. 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.

12. 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.

13. This instrument also withdraws the earlier version of each affected withholding schedule to provide certainty to PAYG withholding payers with regard to their withholding obligations.

14. 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

15. 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.

16. 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.

17. The changes in Tax Laws Amendment (Personal Income Tax Reduction) Act 2008 that affect payments made in the 2010/11 financial year have resulted in changes to most of the current schedules. However, some remain unchanged. This explains why there are some gaps in the schedule numbering.

18. Each withholding schedule is tailored to meet the circumstances of a particular class of employees. For example the weekly tax table is produced for payers who pay their employees weekly.

Consultation

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

20. The Tax 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 packages.

Erin Holland

Deputy Commissioner of Taxation

25th May 2010

Legislative references:

Taxation Administration Act 1953

Higher Education Act 1988

Legislative Instruments Act 2003

Tax Laws Amendment (Personal Income Tax Reduction) Act 2008

Income Tax Rates Act 1986

A New Tax System (Pay As You Go) Act 1999

Overview

The Taxation Administration Act Withholding Schedules 2010 was enacted to address the need for updated withholding schedules to reflect changes in income tax rates and thresholds, particularly those introduced by the Tax Laws Amendment (Personal Income Tax Reduction) Act 2008. This instrument, made by the Commissioner of Taxation under section 15-25 of the Taxation Administration Act 1953, provides a clear and accessible guide for entities to calculate the appropriate amount to withhold from payments to individual taxpayers. The withholding schedules are designed to facilitate the efficient collection of income tax, Medicare levy, Higher Education Loan Program repayments, and Financial Supplement repayments, ensuring taxpayers meet their annual tax obligations through the Pay As You Go (PAYG) system. The instrument supports the PAYG arrangements introduced by the A New Tax System (Pay As You Go) Act 1999, which aim to eliminate large end-of-year tax bills and ensure government revenue is collected throughout the year.

Scope and Application

The Taxation Administration Act Withholding Schedules 2010 instrument pertains to all entities responsible for withholding income tax from payments to individual taxpayers under the PAYG system in Australia. This encompasses employers, businesses, and other withholding payers who are obligated to withhold tax from various types of payments such as wages, salaries, pensions, and other income. The instrument ensures that these entities have clear and updated guidelines for calculating and remitting withheld amounts to the Australian Taxation Office (ATO) in accordance with current tax laws. The scope of the instrument is national, as it applies across all states and territories in Australia. It is enacted under the authority granted by the Taxation Administration Act 1953 and takes into account amendments from the Tax Laws Amendment (Personal Income Tax Reduction) Act 2008. The instrument includes 28 withholding schedules that detail the specific amounts to be withheld based on different income thresholds and payment frequencies. Notably, this instrument provides a structured approach to withholding tax, ensuring compliance with the PAYG system, which is designed to facilitate the collection of income tax, Medicare levy, Higher Education Loan Program, and Financial Supplement repayments throughout the financial year.

Key Provisions

The Taxation Administration Act Withholding Schedules 2010 (F2010L01472) is a legislative instrument created by the Commissioner of Taxation under section 15-25 of Schedule 1 to the Taxation Administration Act 1953 (TAA). This instrument is designed to make the withholding schedules publicly available, which specify the amounts, formulas, and procedures for calculating the amount required to be withheld by an entity under the Pay As You Go (PAYG) system. These withholding schedules take into account the threshold changes resulting from the Tax Laws Amendment (Personal Income Tax Reduction) Act 2008. The schedules are tailored to various classes of employees and payments, such as those made weekly or on other specified intervals. The withholding schedules set out in the instrument impose obligations on entities responsible for making payments to employees or other recipients, requiring them to withhold the correct amount of tax from these payments. Specifically, these schedules provide detailed instructions on how to calculate the withholding amount based on the recipient's income, applicable tax rates, and other relevant factors. Entities must adhere to these schedules to ensure they are meeting their obligations under the PAYG system, which facilitates the collection of income tax, Medicare levy, Higher Education Loan Program, and Financial Supplement repayments. Failure to comply with the withholding schedules can result in significant consequences. Under the TAA, non-compliance with the withholding obligations can lead to civil penalties, including fines. The maximum penalty for a serious contravention can be up to $2,100 for individuals and $10,500 for bodies corporate, as per section 15-30 of the TAA. Additionally, failure to withhold the correct amount of tax can result in the entity being liable for the unpaid tax, along with interest and other charges. Criminal penalties may also apply in cases of intentional disregard of the withholding obligations, with potential fines and imprisonment under the TAA. The instrument also mandates that earlier versions of the withholding schedules be withdrawn to ensure taxpayers are aware of their current obligations.

Area of Law: Taxation Law
Instrument: Statutory Instrument
Concepts: Definitions & Interpretation; Compliance Obligations; Reporting & Disclosure Obligations

Interactions

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.

Legislation content