Taxation Administration Act Withholding Schedules October 2016

Administered by Department of the Treasury

Legislation au F2016L01380 Not in force Legislative Instrument

Legislation content

Taxation Administration Act
Withholding Schedules October 2016

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 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 publicly available.
  3. The instrument contains eight withholding schedules. Each schedule provides information for calculating the withholding amount, taking into account the particular circumstances presented in the schedule.
  4. This is a legislative instrument for the purposes of the Legislation Act 2003.
  5. This legislative instrument will revoke eight schedules which formed part of Legislative Instrument No. F2016L01035. The revoked schedules have been superseded by the eight schedules made by this instrument.

 

Date of effect

6.      The instrument applies from 1 October 2016.

 

What is this instrument about?

7.      These schedules set out the amounts, formulas and procedures to be used for calculating the amount required to be withheld by entities from withholding payments. The withholding schedules facilitate the collection of income tax, Medicare levy, Higher Education Loan Program, Student Start-up Loans, Trade Support Loans and Financial Supplement repayments

8.      These withholding schedules are being updated to incorporate the rates and thresholds contained in the Treasury Laws Amendment (Income Tax Relief) Bill 2016. These updates are needed in order for payers to work out the amount they must withhold from payments made to individual taxpayers.

9.      The date of effect for these schedules is 1 October 2016, which provides sufficient time for employers, payroll providers and software developers to prepare for the change.

10.  The purpose of this instrument is to provide certainty to payers about withholding correct amounts of tax on behalf of their payees, which then assists payees to meet their annual income tax liability. Payers are required to withhold and pay amounts of income earned by payees, at regular intervals, as it is earned during the year. The system for collecting these amounts is called the PAYG withholding system.

 

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.  A number of groups rely upon the withholding schedules. They include: employers, employees, professional tax 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 minor for both implementation and on-going compliance costs. The new instrument is of a minor or machinery nature.  

 

Background

15.  The PAYG system, introduced in A New Tax System (Pay As You Go) Act 1999, is a simple and convenient way for individual taxpayers to meet their annual income tax liabilities either through instalments or through withholding as their income is earned. This system aims to prevent large end-of-year tax bills for individuals. It also ensures that Government has the revenue it needs during the year to provide services and benefits 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 amounts required to be withheld by entities. The TAA requires the Commissioner to make each withholding schedule publicly available.

17.  Each withholding schedule is tailored to meet the circumstances of a particular class of payee.

 

Consultation

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

19.  Community consultation is not appropriate or reasonably practicable for this instrument. The amended withholding schedules ensure that amounts are withheld in accordance with thresholds which have been indexed according to the applicable legislation.

20.  These schedules ensure that withholding rates will match the tax which will be payable when payees lodge their tax returns.

21.  The ATO will provide the necessary information to payroll providers, software developers, and those employers who code their own in-house payroll systems, to ensure that they have sufficient time to update their software packages.

 

 

 

 

 

 

Legislative references:

Taxation Administration Act 1953

Legislation Act 2003

 


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 Withholding Schedules October 2016

 

 

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 withholding schedules updated in accordance with the pay as you go (PAYG) system. The schedules provide certainty to payers about withholding correct amounts of tax on behalf of their payees, which then assists payees to meet their annual income tax liability.

 

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. The schedules set out the amounts, formulas and procedures to be used for calculating the amount required to be withheld by entities from withholding payments.

 

Conclusion

 

This legislative instrument does not raise any human rights issues.

 

 

 

Overview

The Taxation Administration Act Withholding Schedules October 2016 instrument was enacted by the Commissioner of Taxation pursuant to section 15-25 of Schedule 1 to the Taxation Administration Act 1953 (TAA). The instrument updates the withholding schedules to reflect the rates and thresholds contained in the Treasury Laws Amendment (Income Tax Relief) Bill 2016, ensuring that payers can accurately calculate the amount to withhold from payments made to individual taxpayers. This update addresses the need to maintain the integrity of the pay as you go (PAYG) system, which aims to ensure that income tax is collected at the point of income generation, thereby preventing large end-of-year tax bills for individuals and ensuring government revenue is available throughout the year. The instrument provides certainty to various stakeholders, including employers, software developers, and the Australian Taxation Office, by specifying the amounts, formulas, and procedures for calculating tax withholdings under the PAYG system.

Scope and Application

The Taxation Administration Act Withholding Schedules October 2016 is a legislative instrument made by the Commissioner of Taxation under section 15-25 of Schedule 1 to the Taxation Administration Act 1953. This instrument updates the withholding schedules that specify the amounts, formulas, and procedures to be used for calculating the tax withheld from payments made to individual taxpayers, thus facilitating the collection of income tax, Medicare levy, and other repayments. These schedules apply from 1 October 2016 and are designed to assist various stakeholders, including employers, employees, tax advisers, and software developers, in meeting their tax obligations through the pay as you go (PAYG) withholding system. The purpose of this instrument is to provide certainty and ensure that the correct tax amounts are withheld and paid, thereby helping taxpayers meet their annual tax liabilities. The instrument also ensures that withholding rates align with the tax payable when taxpayers lodge their returns. The Commissioner of Taxation is required to make these schedules publicly available, ensuring transparency and compliance with tax obligations.

Key Provisions

The Taxation Administration Act Withholding Schedules October 2016 (F2016L01380) presents updated withholding schedules, which specify the amounts, formulas, and procedures for entities to use when withholding tax under the PAYG system (sections 7 and 8). These schedules are designed to facilitate the calculation of income tax, Medicare levy, Higher Education Loan Program, Student Start-up Loans, Trade Support Loans, and Financial Supplement repayments (section 7). The purpose of these schedules is to provide certainty to payers about the correct tax withholding amounts, which assists payees in meeting their annual income tax liability (section 10). The withholding schedules are updated to reflect the rates and thresholds contained in the Treasury Laws Amendment (Income Tax Relief) Bill 2016, ensuring that the amounts withheld match the tax payable when payees lodge their tax returns (section 9). The Act imposes specific obligations on various parties, including employers, employees, professional tax advisers, software developers, and the Australian Taxation Office, among others (section 12). These parties must use the updated withholding schedules to determine the correct tax withholding amounts. The Commissioner of Taxation is empowered to make these schedules publicly available under section 15-25 of the TAA, and the Commissioner has exercised this power by making these schedules accessible (section 16). Employers, payroll providers, and software developers are required to update their systems to reflect the new schedules to ensure compliance with the PAYG withholding system (section 21). Breaches of the withholding schedules may have civil or criminal consequences, although specific offences and penalties are not detailed in the explanatory statement. However, the general provisions of the TAA and other relevant legislation would apply, potentially leading to penalties for incorrect or late withholding, which could include financial penalties or legal action. The minor or machinery nature of this legislative instrument suggests that the compliance costs for implementation and ongoing compliance are minimal (section 14). Despite the absence of explicit penalties in the explanatory statement, it is crucial for entities to adhere to the withholding schedules to avoid any adverse consequences under the broader tax 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.