Taxation Administration (Withholding Variation for Payments to Indigenous Artists who do not Quote an ABN) Legislative Instrument 2026

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Legislation au F2026L00231 In force Legislative Instrument

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Explanatory Statement

Taxation Administration (Withholding Variation for Payments to Indigenous Artists who do not Quote an ABN) Legislative Instrument 2026

 

 

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 reduces to nil the amount that must be withheld from a payment for artistic work provided by an Indigenous artist who lives or works in Zone A in Australia (Zone A covers certain remote locations) and who does not quote an ABN in relation to that work. A payment summary does not need to be provided in relation to those payments as the amount withheld is nil.
  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

  1.                   This instrument commences on the day after it is registered on the Federal Register of Legislation.
  2.                   This instrument repeals and replaces the PAYG Withholding Variation: Variation of amount to be withheld from Indigenous artists when an ABN is not provided instrument which would otherwise sunset on 1 April 2026. This instrument has the same substantive effect as the one it is replacing.

 

Background

  1.                   Under subsection 12-190(1) in Schedule 1 to the Act, a payer must withhold an amount from a payment made to an entity that does not quote an ABN (where it would ordinarily be required to be quoted), unless an exemption in section 12-190 in Schedule 1 to the Act applies.
  2.                   Under this section a payer may be required to withhold an amount from a payment they make to a recipient who supplies artistic works if the recipient does not quote an ABN. Where an ABN is quoted in relation to that supply, withholding under section 12-190 in Schedule 1 to the Act is not required.
  3.                   However, it may be difficult for a recipient of a withholding payment to quote an ABN in relation to a supply they make in certain circumstances, including where age, language, level of education or location make it more difficult for that person to engage fully with the requirements of the tax system and obtain an ABN.
  4.               Requiring an ABN to be quoted in these circumstances may present difficulties for the recipient (who may find it challenging to obtain an ABN to quote in relation to a supply) and impose a compliance burden on the payer (who must withhold an amount from the payment as no ABN is quoted).
  5.               The amount required to be withheld from a withholding payment can also be varied by the Commissioner, including to nil. Under section 15-15 of Schedule 1 to the Act the Commissioner may vary the amount required to be withheld by an entity (through a written notice) or classes of entity (by legislative instrument) from a withholding payment.

 

Effect of this instrument

  1.               An entity is not required to withhold an amount from a payment it makes to an Indigenous person for their artistic work where the person resides or works in Zone A and does not quote an ABN in relation to the artistic work.
  2.               The concept of artistic work generally refers to work exhibiting human creative skill. This instrument specifically identifies that artistic works include (but are not limited to) graphic work, photography, sculpture, painting, collage, works of artistic craftsmanship, performances, presentation or participation in a musical performance, play, dance, entertainment, display exhibition or similar activity of a cultural nature.
  3.               Artistic works may be created by the Indigenous artist individually or in conjunction with other artists.
  4.               Under the Income Tax Assessment Act 1936 (ITAA 1936), certain areas within Australia that are particularly remote or isolated are designated as being within certain zones.
  5.               Part 1 of Schedule 2 of the ITAA 1936 specifies locations that fall within Zone A. Locations within Zone A are generally remote or isolated locations in the Northern Territory, northern Western Australia, or far-north and north-western Queensland. This instrument applies to a payment made to an Indigenous person who lives or works in a location covered by Zone A.
  6.               Obtaining an ABN may be onerous for Indigenous artists who, for reasons such as age, language, level of education or isolation, may not be able to fully engage with the complexity of the tax system.
  7.               Varying the amount required to be withheld from these payments to nil:
  • provides certainty for the entity making the payment that withholding is not required when an ABN is not quoted by an Indigenous artist
  • provides certainty for Indigenous artists that they are not required to obtain and quote an ABN in relation to their artistic works, and
  • removes the requirement for the entity making the payment to provide a payment summary to the Indigenous artist in relation to the payment.
  1.               Under subsection 16-167(1) in Schedule 1 to the Act an entity that makes a withholding payment covered by section 12-190 in Schedule 1 to the Act must give a payment summary to the recipient, unless the amount required to be withheld from that payment is nil.
  2.               The payer is therefore not required to issue a payment summary for payments to which section 6 applies, as the amount required to be withheld has been varied to nil.

 

Compliance cost assessment

  1.               Compliance cost impact: Minor – There will be no additional regulatory impacts as the instrument is minor and machinery in nature (OIA25-10634).

 

Consultation

  1.               Subsection 17(1) of the Legislation Act 2003 requires that the Commissioner is satisfied that appropriate and reasonably practicable consultation has been undertaken before they make a determination.
  2.               For this instrument, broad public consultation was undertaken for a period of 6 weeks.
  3.               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 to their subscribers and members. This ensures advice of the draft is disseminated widely across the tax professional community, and that they are in an informed position to provide comments and feedback.

Outcome of consultation

  1.               No comments were received.


 

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 Payments to Indigenous Artists who do not Quote an ABN) Legislative Instrument 2026

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

Under subsection 12-190(1) in Schedule 1 to the Taxation Administration Act 1953 (the Act), an amount may be required to be withheld from a payment that is made to a payee who does not quote an ABN, in circumstances where an ABN would ordinarily be required.

This instrument reduces to nil the amount that an entity must withhold from a payment for an artistic work provided by an Indigenous person, where that person lives or works in Zone A in Australia and does not quote an ABN in relation to that work.

This variation provides assurance to both the Indigenous person and the entity making the payment that an ABN does not need to be quoted in relation to the supply of the artistic work.

Additionally, by varying the amount to be withheld from these payments to nil, the entity making the payment is no longer required under subsection 16-167(1) in Schedule 1 to the Act to provide a payment summary to the Indigenous person in respect of the payment.

 

Human rights implications

This legislative instrument does not engage any of the applicable rights or freedoms. It merely varies to nil the amount that must be withheld from payments made to Indigenous persons for artistic work they supply in certain circumstances.

 

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 Payments to Indigenous Artists who do not Quote an ABN) Legislative Instrument 2026, made under section 15-15 of the Taxation Administration Act 1953, aims to address the issue of withholding tax payments from Indigenous artists residing or working in remote areas of Australia, specifically Zone A, who do not quote an Australian Business Number (ABN) for their artistic works. This legislative instrument reduces the withholding tax to nil for these artists, alleviating the burden of obtaining an ABN and providing certainty to both the artists and the payers. The instrument is intended to simplify the tax compliance process for Indigenous artists in remote areas, where factors such as age, language barriers, and isolation may hinder their ability to engage with the tax system. The instrument was developed by the Commissioner of Taxation and was subject to public consultation as required by the Legislation Act 2003, although no comments were received. The instrument is compatible with human rights, as it does not engage any of the applicable rights or freedoms, merely adjusting the withholding amount to nil in specific circumstances. This legislative instrument aims to ensure that Indigenous artists in remote areas are not disadvantaged due to their inability to obtain an ABN, thereby simplifying their interaction with the tax system.

Scope and Application

The Taxation Administration (Withholding Variation for Payments to Indigenous Artists who do not Quote an ABN) Legislative Instrument 2026 applies to payments made to Indigenous artists for artistic work provided within designated remote areas of Australia, referred to as Zone A. This zone includes specific remote locations in the Northern Territory, northern Western Australia, and far-north and north-western Queensland, as defined in Part 1 of Schedule 2 of the Income Tax Assessment Act 1936. The instrument specifically targets Indigenous artists who reside or work in these remote areas and do not quote an Australian Business Number (ABN) in relation to their work. The legislation reduces the withholding amount to nil for such payments, thereby eliminating the requirement for the payer to withhold any amount from these payments and also exempts the payer from providing a payment summary to the Indigenous artist. This legislative instrument is crafted to alleviate the administrative burden on both Indigenous artists and payers, considering the challenges these artists may face in obtaining an ABN due to factors such as age, language barriers, education level, or isolation.

Key Provisions

The primary sections of the Taxation Administration (Withholding Variation for Payments to Indigenous Artists who do not Quote an ABN) Legislative Instrument 2026 (the instrument) are found under section 15-15 in Schedule 1 to the Taxation Administration Act 1953 (the Act). This instrument specifically targets payments for artistic work provided by Indigenous artists who live or work in Zone A in Australia, an area that includes remote locations in the Northern Territory, northern Western Australia, and far-north and north-western Queensland. It reduces to nil the amount that must be withheld from such payments if the artist does not quote an Australian Business Number (ABN). A payment summary is also not required when the amount withheld is nil. The instrument replaces the PAYG Withholding Variation: Variation of amount to be withheld from Indigenous artists when an ABN is not provided instrument, which was set to sunset on 1 April 2026. The Act imposes several obligations on entities making payments to Indigenous artists who do not quote an ABN. Firstly, the entity must ensure that the payment is made to an Indigenous person residing or working in Zone A. Secondly, the payment must be for artistic work provided by that person, where the work is of a type that generally exhibits human creative skill, such as graphic work, photography, sculpture, painting, and other forms of artistic craftsmanship or cultural performances. The entity must not withhold any amount from the payment, and they are exempt from providing a payment summary, as the amount withheld is nil. These provisions aim to alleviate the administrative burden on both the Indigenous artists and the entities making the payments, especially in remote areas where obtaining an ABN might be particularly challenging due to factors like age, language, education level, or isolation. Breaches of this legislative instrument may not directly result in criminal or civil penalties under the instrument itself. However, if an entity fails to comply with the Act's broader withholding requirements, they may face civil or criminal consequences. For instance, under section 284-15 of the Act, an entity that fails to withhold the correct amount from a payment can be liable for a penalty equal to the amount of tax not withheld. Additionally, if the entity makes a false or misleading statement in a document required to be lodged with the Commissioner of Taxation, they may be subject to penalties under section 284-50 of the Act, which can be up to $2,100 for individuals and $10,500 for entities. These penalties serve to ensure compliance with the withholding requirements and the integrity of the tax system.

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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.