Taxation Administration (Withholding Variation for Occasional Payroll Donations to Deductible Gift Recipients) Legislative Instrument 2024

Administered by Department of the Treasury

Legislation au F2024L00130 In force Legislative Instrument

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Explanatory Statement

Taxation Administration (Withholding Variation for Occasional Payroll Donations to Deductible Gift Recipients) Legislative Instrument 2024

 

 

General outline of instrument

  1.                This instrument is made under section 15-15 in Schedule 1 to the Taxation Administration Act 1953 (the Act).
  2.                This instrument varies the amount a payer is required to withhold under the pay as you go (PAYG) system for payees who make payroll donations to a deductible gift recipient under an occasional giving arrangement. It replaces the legislative instrument Taxation Administration Act 1953 – Pay as you go withholding – Occasional payroll donations to deductible gift recipients No. 4 (F2014L00012).
  3.                The instrument is a legislative instrument for the purposes of the Legislation Act 2003.
  4.                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.

 

Date of effect

5.                  This instrument commences on the day after it is registered on the Federal Register of Legislation.

 

Effect of this instrument

6.                  This instrument varies the amount that a payer is required to withhold from a withholding payment to a payee under Subdivision 12-B in Schedule 1 to the Act where:

(a)               all or part of the withholding payment has been made, or will be made, as a donation to a deductible gift recipient under an occasional giving arrangement; and

(b)               the payee of the withholding payment has not advised the payer that they do not want a variation of the amount withheld.

7.                  The varied amount required to be withheld must be worked out in accordance with the method statement in section 6 of the instrument. If the amount calculated using the method statement is zero or negative, the amount that the payer must withhold from the payment is varied to nil.

8.                  Step 2 (in paragraph 6(2)(b)) of the method statement requires the payer to multiply the amount of the donation to the deductible gift recipient under the occasional giving arrangement by 0.32. This rate has been chosen as it is approximately the mid-point tax rate (after accounting for the Medicare levy) for Australian residents for tax purposes.

 

Compliance cost assessment

9.                  Minor – there will be no additional regulatory impacts as the instrument is minor and machinery in nature (OIA23-05768).

 

Background

10.              There is another legislative instrument – PAYG Withholding Variation: Donations to deductible gift recipients – which provides a reduction in withholding when a payer makes a donation at the direction of a payee under a regular planned giving arrangement. That instrument is not suitable for cases where a payee wishes to make a one-off or occasional donation.

11.              The 2009 Victorian bushfires resulted in a demand from payers and payees who sought a streamlined withholding variation arrangement for one-off or occasional donations made to deductible gift recipients through payroll systems that was comparable to the arrangement provided in respect of regular workplace giving arrangements. To facilitate this, a PAYG withholding variation legislative instrument for occasional or irregular donations was drafted and first registered in 2009 and remade in 2014.

12.              There is an ongoing need for a simple withholding variation mechanism to facilitate one-off or occasional donations through payroll systems to deductible gift recipients. This instrument will continue to provide a simple withholding variation mechanism for a payer (such as an employer) who, at the direction of the payee (such as an employee), makes donations to deductible gift recipients under occasional giving arrangements.

 

Consultation

13.              Subsection 17(1) of the Legislation Act 2003 requires that the Commissioner be satisfied that appropriate and reasonably practicable consultation has been undertaken before they make an instrument.

14.              Broad public consultation was undertaken on this instrument for a period of 4 weeks from 3 October to 31 October 2023.

15.              The draft instrument and draft explanatory statement were published to the ATO Legal database. Publication was advertised via the ‘What’s new’ page on that website, and via the ‘Open Consultation’ page on ato.gov.au. Major tax and superannuation publishers and associations monitor these pages and include the details in the daily and weekly alerts and newsletters that they provide to their subscribers and members.

16.              No submissions were received during this consultation process.

 

 

Legislative references

Acts Interpretation Act 1901

Human Rights (Parliamentary Scrutiny) Act 2011

Income Tax Assessment Act 1997

Legislation Act 2003

Taxation Administration Act 1953

 


Statement of compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Taxation Administration (Withholding Variation for Occasional Payroll Donations to Deductible Gift Recipients) Legislative 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 of the legislative instrument

This instrument provides a simple mechanism to vary the amount a payer is required to withhold under the pay as you go (PAYG) system for a payee who makes a one-off or occasional payroll donation to a deductible gift recipient under an occasional giving arrangement.

 

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms. The instrument provides a simple mechanism for calculating the amount required to be withheld when an occasional donation is made, and reduces compliance costs for those involved in making a donation.

 

Conclusion

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

Overview

The Taxation Administration (Withholding Variation for Occasional Payroll Donations to Deductible Gift Recipients) Legislative Instrument 2024 was enacted to provide a streamlined withholding variation mechanism for one-off or occasional donations made to deductible gift recipients through payroll systems. This instrument, made under the Taxation Administration Act 1953, addresses the need for a simplified process to facilitate such donations, responding to the demand that arose from the 2009 Victorian bushfires. The instrument replaces the previous legislative instrument from 2014 and is intended to continue offering a straightforward withholding variation mechanism for payers making occasional donations at the direction of payees. It was developed after broad consultation with the public and tax professionals, although no submissions were received during the consultation period. The instrument ensures compliance with human rights, as it does not engage any of the applicable rights or freedoms and aims to reduce compliance costs.

Scope and Application

The Taxation Administration (Withholding Variation for Occasional Payroll Donations to Deductible Gift Recipients) Legislative Instrument 2024 applies to payers, including employers, who make payroll donations to deductible gift recipients under an occasional giving arrangement on behalf of their payees, such as employees. This instrument specifically alters the withholding amount under the pay as you go (PAYG) system for these specific types of donations. The legislative instrument operates nationally across Australia, as it is made under the Commonwealth's Taxation Administration Act 1953. The application is limited to donations made under occasional giving arrangements, excluding regular planned giving arrangements which are governed by different legislative provisions. There are no stated exclusions or thresholds within the instrument itself, though the varied withholding amount is determined based on a method statement provided in section 6. The instrument may be further extended or restricted through subordinate instruments made under the authority of the Taxation Administration Act 1953.

Key Provisions

The Taxation Administration (Withholding Variation for Occasional Payroll Donations to Deductible Gift Recipients) Legislative Instrument 2024 (the Instrument) is designed to streamline the withholding variation process for employers making occasional payroll donations to deductible gift recipients on behalf of their employees. According to section 6 of the Instrument, the varied withholding amount is calculated by multiplying the donation amount by 0.32, which approximates the mid-point tax rate for Australian residents (section 6(2)(b)). This calculation method simplifies the withholding variation process for occasional donations, as outlined in section 7, where if the calculated amount is zero or negative, no withholding is required. This approach ensures that the PAYG system can accommodate the specific needs of one-off donations without overly complicating the process for employers and employees alike. The Instrument imposes several obligations on employers, primarily concerning the calculation and application of the varied withholding amount for occasional donations. Employers must ensure that the correct amount is withheld from payments made as donations to deductible gift recipients under occasional giving arrangements, following the method statement provided in section 6 of the Instrument. Additionally, employers must adhere to the requirements outlined in section 8, which stipulates that the varied withholding amount must be zero if the calculated amount is zero or negative. This ensures that the PAYG system is accurately applied to occasional donations, maintaining compliance with the tax regulations while simplifying the process for both employers and employees. Breach of the obligations imposed by the Instrument may have legal consequences, although the explanatory statement does not specify detailed penalties for non-compliance. However, it is understood that general tax laws and penalties would apply in cases of incorrect withholding or failure to comply with the PAYG system requirements. These penalties could include fines or interest on unpaid tax amounts, as governed by the general provisions of the Taxation Administration Act 1953. Employers must therefore ensure they correctly apply the withholding variation method to avoid any potential penalties or interest charges. The Instrument also highlights that it is compatible with human rights, as it does not engage any of the applicable rights or freedoms and provides a simple mechanism for calculating the withholding amount for occasional donations. This compatibility ensures that the Instrument operates within the framework of human rights legislation, maintaining its validity and applicability under Australian law. The streamlined process for occasional donations is designed to reduce compliance costs and facilitate ease of use for employers and employees, aligning with the broader objectives of the PAYG system.

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Taxation Law
Instrument
Legislative Instrument
Concepts
Definitions & Interpretation
Compliance Obligations
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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.