Explanatory Statement
Taxation Administration
(Withholding Schedules) Instrument 2024
General outline of instrument
- This instrument is made under section 15-25 in Schedule 1 to the Taxation Administration Act 1953 (TAA).
- The instrument makes withholding schedules that specify the amount, formulas and procedures to be used for working out the amount required to be withheld by an entity under the pay as you go (PAYG) system.
- The instrument contains fifteen withholding schedules. Each schedule provides information for calculating the withholding amount, taking into account the particular circumstances presented in the schedule.
- The instrument repeals and replaces the previous legislative instrument Taxation Administration Withholding Schedules 2023 (F2023L00743), which was registered on 08 June 2023 (the 2023 instrument).
- It also repeals the redundant legislative instrument Taxation Administration Act 1953 - Pay as you go withholding - Tax table for additional amounts to withhold as a result of an agreement to increase withholding (F2014L01665), which was registered on 10 December 2014 (the 2014 agreement to increase withholding instrument). The 2014 agreement to increase withholding instrument has been replaced by schedule 14 of this instrument.
- Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
- The instrument is a legislative instrument for the purposes of the Legislation Act 2003.
Date of effect
8. The instrument commences on 1 July 2024.
Effect of this instrument
9. The withholding schedules in this instrument set out the amounts, formulas and procedures to be used to calculate the amount required to be withheld from certain payments. The withholding schedules facilitate the collection of income tax, Medicare levy, Higher Education Loan Program, Student Start-up Loans, Australian Apprenticeship Support Loans, VET Student Loans and Financial Supplement repayments.
10. All withholding schedules have been updated by this instrument, including to:
- give effect to recent amendments to the tax rates and Medicare levy thresholds
- remove redundant web links, web content, file type and file size references, and
- update and provide ‘Quick Code’ (QC code) information.
11. Quick Codes are alphanumeric codes that begin with ‘QC’. They can be used to navigate to a specific webpage on the Australian Taxation Office (ATO) website (ato.gov.au) by typing the relevant code into the ATO website search bar.
12. In addition to the general changes set out above:
- Withholding schedules 1 and 15 have been updated to account for amendments made to the Income Tax Rates Act 1986 in 2024. These amendments modified income tax rate thresholds and tax rates for individuals for the 2024-25 and later income years.
- Withholding schedules 1, 8, 9, 11 and 13 have been updated to account for amendments made to the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999 in 2024. These amendments affect the Medicare levy low-income thresholds and phase-in limits which apply to assessments for the 2023-24 and later income years.
- Withholding schedule 8 has been updated to account for the annual indexing of the repayment income thresholds for study and training support loans.
- Withholding schedule 29 in the 2023 instrument has been renumbered to Schedule 10 in this instrument, to ensure the sequential numbering of schedules.
13. Schedule 14 of this instrument (which was also included in the 2023 instrument) replaces the 2014 agreement to increase withholding instrument. As the 2014 agreement to increase withholding instrument is redundant, this instrument repeals it.
Incorporation of withholding lookup tools and forms
14. To assist entities to determine the correct amount to withhold, several withholding schedules include withholding lookup tools. The lookup tools are spreadsheets which identify a specific amount to withhold for a pay period, after an earnings amount is input into the spreadsheet for the pay period.
15. The lookup tools are freely available for entities to apply when using the withholding schedule. The withholding schedules with a lookup tool can be accessed on the ATO website (ato.gov.au) by searching for the withholding schedule’s quick code number in the table below:
Quick Code | Title |
QC102417 | Schedule 2 – Tax table for individuals employed in the horticultural or shearing industry |
QC202418 | Schedule 3 – Tax table for actors, variety artists and other entertainers |
QC102423 | Schedule 9 – Tax table for seniors and pensioners |
QC102428 | Schedule 15 – Tax table for working holiday makers |
16. To assist entities to determine the correct amount to withhold, consideration must be also given to whether certain forms referred to in the instrument have been completed, and the information that has been provided in any such completed forms. The forms are available via the ATO website (ato.gov.au) by searching for the relevant quick code number in the table below.
Quick code | Title |
QC102413 | Fortnightly tax table |
QC25766 | Interdependency relationship |
QC102435 | Medicare levy adjustment weekly tax table |
QC17088 | Medicare levy variation declaration |
QC26159 | PAYG payment summary – employment termination payment |
QC22557 | PAYG payment summary – foreign employment |
QC21978 | PAYG payment summary – individual non-business |
QC19550 | PAYG payment summary – superannuation income stream |
QC35966 | PAYG payment summary – superannuation lump sum |
QC27073 | Payments under a voluntary agreement |
QC19282 | Request for determination of the deductible amount of UPP of an Australian pension or annuity |
QC102431 | Study and training support loans fortnightly tax table |
QC102430 | Study and training support loans monthly tax table |
QC102429 | Study and training support loans weekly tax table |
QC16161 | Tax file number declaration |
QC27134 | Tax file number – application or enquiry for individuals |
QC16945 | Tax tables |
QC102434 | Tax table for daily and casual workers |
QC26218 | Taxation of termination payments |
QC16223 | Voluntary agreement for PAYG withholding |
QC102414 | Weekly tax table |
QC16347 | Withholding declaration |
QC18292 | Withholding declaration – short version for seniors and pensioners |
QC51680 | Withholding for allowances |
QC16601 | Withholding from leave payment for continuing employees |
17. These withholding lookup tools and forms are incorporated by reference in this instrument in accordance with paragraph 14(1)(b) of the Legislation Act 2003. That paragraph allows a legislative instrument to incorporate any other document in writing which exists either at the time the legislative instrument commences, or at a time before its commencement.
18. This instrument incorporates the withholding lookup tools and forms that existed immediately before this instrument was registered on the Federal Register of Legislation. These lookup tools and forms will remain unchanged for the life of this instrument. Changes to the withholding lookup tools and forms will only be made when it is necessary to give effect to a new legislative instrument that both contains new withholding schedules and repeals the current instrument.
Compliance cost assessment
19. Minor - there will be no or minimal impacts for both implementation and ongoing compliance costs. The legislative instrument is minor and machinery in nature (The Office of Impact Analysis reference: OIA24-07543).
Background
20. The PAYG system, introduced by the A New Tax System (Pay As You Go) Act 1999, is a simple and convenient way for taxpayers to meet their annual income tax liabilities either through instalments or through withholding as their income is earned.
21. Under that system, payers are required to withhold (and remit to the ATO) amounts from certain payments they make to other entities during the year. This system aims to prevent large end-of-year tax bills. It also ensures that the Commonwealth has the revenue it needs during the year to provide services and benefits to the community.
22. Subsection 15-25(1) in Schedule 1 to 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.
23. This instrument contains the withholding schedules, to help payers withhold the correct amount from certain payments they make.
24. Each withholding schedule is tailored to meet the circumstances of a particular class of payment or payee.
25. These schedules are relied on by a number of groups including employers, employees, professional tax advisers, payroll software developers, payroll service providers, and the ATO.
Consultation
26. The making and publication of withholding schedules is a routine part of tax administration.
27. No community consultation has been undertaken as it is not reasonably practicable for withholding schedules. This is because of the very short timing between the Federal Budget (in May 2024), which affects the content of this instrument, and the need to register the instrument as soon as possible to give payroll software providers and employers sufficient time to update their software packages and systems in time for the new financial year.
Legislative references:
Acts Interpretation Act 1901
A New Tax System (Pay As You Go) Act 1999
A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999
Australian Federal Police Act 1979
Education and Other Legislation Amendment (VET Student Loan Debt Separation) Act 2018
Family Law Act 1975
Higher Education Support Act 2003
Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018
Human Rights (Parliamentary Scrutiny) Act 2011
Income Tax Rates Act 1986
Legislation Act 2003
Medicare Levy Act 1986
Migration Act 1958
Social Security Act 1991
Student Assistance Act 1973
Taxation Administration Act 1953
Trade Support Loans Act 2014
Veterans’ Entitlements Act 1986
Statement of compatibility with human rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Taxation Administration (Withholding Schedules) Instrument 2024
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 the withholding schedules that entities must use under the pay as you go (PAYG) system. The schedules provide certainty to payers about what amounts they are required to withhold (and remit to the Australian Taxation Office) from certain payments they make to other entities. This assists those other entities to meet their annual income tax liability.
Without the instrument, payers would not know the correct amounts to withhold from relevant payments. Further, the instrument helps ensure that taxpayers do not receive large end-of-year tax bills, and the Commonwealth has the revenue it needs during the year to provide services and benefits to the community.
Human rights implications
This legislative instrument does not engage any of the applicable rights or freedoms because it is of a minor or machinery nature. The withholding schedules set out the amounts, formulas and procedures to be used to calculate the amount required to be withheld from certain payments and remitted to the Australian Taxation Office.
Conclusion
This legislative instrument is compatible with human rights because it does not raise any human rights issues.