Commonwealth Consolidated Acts Commonwealth Consolidated ActsNote: See section 3AA.
Chapter 2 -- Collection, recovery and administration of income tax
Part 2‑1 -- Introduction to the Pay as you go (PAYG) system
Division 6 -- Guide to Parts 2‑5 and 2‑10
6‑1 What Parts 2‑5 and 2‑10 are about
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 "Pay as you go".
Amounts collected under this system also go towards meeting liability for Medicare levy, liability to repay contributions under the Higher Education Contribution Scheme (HECS), liability to repay debts under the Higher Education Loan Program (HELP) and liability to repay financial supplement debts under the Student Financial Supplement Scheme (SFSS).
Table of sections
6‑ 5 The Pay as you go (PAYG) system
6‑10 How the amounts collected are dealt with
6‑5 The Pay as you go (PAYG) system
(1) Parts 2‑5 and 2‑10 establish the PAYG system, which has 2 components:
• PAYG withholding (Part 2‑5)
• PAYG instalments (Part 2‑10).
PAYG withholding
(2) Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner.
For a list of the payments and other transactions to which
PAYG withholding
applies, see Division 10
PAYG instalments
(3) You pay PAYG instalments directly to the Commissioner. These are usually based on your GDP‑adjusted notional tax or your ordinary income for a past period, but excluding:
• income subject to PAYG withholding (with certain exceptions)
• exempt income, or income that is otherwise not assessable.
An instalment is usually paid after a quarter, but some taxpayers are eligible to pay an annual instalment after the end of the income year.
6‑10 How the amounts collected are dealt with
You are entitled to credits for the amounts of your income that are collected under the PAYG system. The credits are applied under Division 3 of Part IIB against your tax debts, and any excess is refunded to you.
Part 2‑5 -- Pay as you go (PAYG) withholding
Division 10 -- Guide to Part 2‑5
Under PAYG withholding, amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to you is required to withhold an amount from the payment, and then to pay the amount to the Commissioner. If the payment is personal services income that is included in the assessable income of someone else under Division 86 of the Income Tax Assessment Act 1997 , the payer must pay such an amount to the Commissioner at a later date.
If a non‑cash benefit is provided instead of a payment, the provider must first pay to the Commissioner the amount that would have been withheld from the payment.
This Part also contains provisions about the obligations and rights of payers and recipients.
10‑5 Summary of withholding payments
(1) The payments and other transactions covered by PAYG withholding are called withholding payments. They are summarised in the table.
Note: The obligation to pay an amount to the Commissioner is imposed on the entity making the withholding payment (except for items 17, 19 and 22, and 26 (to the extent that it covers subsection 12‑390(4))).
|
Summary of withholding payments |
||
|
Item |
Withholding payment |
Section |
|
A payment of salary etc. to an employee |
12‑35 |
|
|
2 |
12‑40 |
|
|
3 |
A payment of salary etc. to an office holder (e.g. a member of the Defence Force) |
12‑45 |
|
3A |
a payment to a * religious practitioner |
12‑47 |
|
4 |
A return to work payment to an individual |
12‑50 |
|
5 |
A payment that is covered by a voluntary agreement |
12‑55 |
|
6 |
A payment under a labour hire arrangement or a payment specified by regulations |
12‑60 |
| 48 valign=top style='width:35.95pt;border:none;border-bottom:solid windowtext 1.0pt; padding:0cm 5.35pt 0cm 5.35pt'>
7 |
A * superannuation income stream or an annuity |
12‑80 |
|
8 |
A * superannuation lump sum or an * employment termination payment |
12‑85 |
|
9 |
An unused leave payment |
12‑90 |
|
10 |
A social security or similar payment (e.g. old age pension) |
12‑110 |
|
11 |
A Commonwealth education or training payment |
12‑115 |
|
12 |
A compensation, sickness or accident payment |
12‑120 |
|
13 |
A payment arising from an investment where the recipient does not quote its tax file number, or in some cases, its ABN |
12‑140 |
|
14 |
Investor becoming presently entitled to income of a unit trust |
12‑145 |
|
15 |
A payment for a supply where the recipient of the payment does not quote its ABN |
12‑190 |
|
16 |
A dividend payment to an overseas person |
12‑210 |
|
17 |
A dividend payment received for a foreign resident |
12‑215 |
|
18 |
An interest payment to an overseas person |
12‑245 |
|
19 |
An interest payment received for a foreign resident |
12‑250 |
|
20 |
An interest payment derived by a lender in carrying on business through overseas permanent establishment |
12‑255 |
|
21 |
A royalty payment to an overseas person |
12‑280 |
|
22 |
A royalty payment received for a foreign resident |
12‑285 |
|
22A |
A departing Australia superannuation payment |
12‑305 |
|
22AA |
An * excess untaxed roll‑over amount |
12‑312 |
|
22B |
A payment (of a kind set out in the regulations) to a foreign resident |
12‑315 |
|
22C |
A payment (of a kind set out in the regulations) received for a foreign resident |
12‑317 |
|
23 |
A mining payment |
12‑320 |
|
24 |
A natural resource payment |
12‑325 |
|
25 |
A payment by a managed investment trust |
12‑385 |
|
26 |
A payment by a * custodian or other entity |
12‑390 |
(2) These can also be treated as withholding payments:
(a) alienated personal services payments (see Division 13);
(b) non‑cash benefits (see Division 14).
Note: The obligation to pay an amount to the Commissioner is imposed on the entity receiving the alienated personal services payment or providing the non‑cash benefit.
Division 11 -- Preliminary matters
Table of sections
11‑5 Constructive payment
The object of this Part is to ensure the efficient collection of:
(a) income tax; and
(b) Medicare levy; and
(c) amounts of liabilities to the Commonwealth under Chapter 5A of the Higher Education Funding Act 1988 ; and
(ca) amounts of liabilities to the Commonwealth under Chapter 4 of the Higher Education Support Act 2003 ; and
(da) amounts of liabilities to the Commonwealth under Part 2B.3 of the Social Security Act 1991 ; and
(db) amounts of liabilities to the Commonwealth under Division 6 of Part 4A of the Student Assistance Act 1973 ; and
(d) * withholding tax; and
(e) * mining withholding tax; and
(f) * TFN withholding tax.
(1) In working out whether an entity has paid an amount to another entity, and when the payment is made, the amount is taken to have been paid to the other entity when the first entity applies or deals with the amount in any way on the other's behalf or as the other directs.
(2) An amount is taken to be payable by an entity to another entity if the first entity is required to apply or deal with it in any way on the other's behalf or as the other directs.
Division 12 -- Payments from which amounts must be withheld
Table of Subdivisions
12‑A General rules
12‑B Payments for work and services
12‑C Superannuation payments, employment termination payments and unused leave payments
12‑D Benefit and compensation payments
12‑E Payments where TFN or ABN not quoted
12‑F Dividend, interest and royalty payments
12‑FA Departing Australia superannuation payments
12‑FAA Excess untaxed roll-over amount [ see Note 2]
12‑FB Payments to foreign residents etc.
12‑G Payments in respect of mining on Aboriginal land, and natural resources
12‑H Distributions of managed investment trust income
Subdivision 12‑A -- General rules
Table of sections
12‑5 What to do if more than one provision requires a withholding
12‑7 Division does not apply to alienated personal services payments
12‑10 Division does not apply to non‑cash benefits
12‑20 Application of Division and regulations to non‑share dividends
Exempt income of recipient
(1) An entity need not withhold an amount under section 12‑35, 12‑40, 12‑45, 12‑47, 12‑50, 12‑55, 12‑60, 12‑80, 12‑85, 12‑90, 12‑120 or 12‑190 from a payment if the whole of the payment is * exempt income of the entity receiving the payment.
Non‑assessable non‑exempt income of recipient
(1A) An entity need not withhold an amount under Subdivision 12‑B, Subdivision 12‑C or section 12‑120 or 12‑190 from a payment if the whole of the payment is not assessable income and is not * exempt income of the entity receiving the payment.
Living‑away‑from‑home allowance benefit
(2) In working out how much to withhold under section 12‑35, 12‑40, 12‑45, 12‑47, 12‑115, 12‑120, 12‑315 or 12‑317 from a payment, disregard so much of the payment as is a living‑away‑from‑home allowance benefit as defined by section 136 of the Fringe Benefits Tax Assessment Act 1986 .
Expense payment benefit
(3) In working out how much to withhold under section 12‑35, 12‑40, 12‑45, 12‑47, 12‑115, 12‑120, 12‑315 or 12‑317 from a payment, disregard so much of the payment as:
(a) is an expense payment benefit as defined by section 136 of the Fringe Benefits Tax Assessment Act 1986 ; and
(b) is not any of the following:
(i) an exempt benefit under section 22 of that Act (about reimbursement of car expenses on the basis of distance travelled);
(ii) an expense payment benefit in relation to a contribution to an * FHSA.
12‑5 What to do if more than one provision requires a withholding
(1) If more than one provision in this Division covers a payment, only one amount is to be withheld from the payment.
(2) The provision to apply is the one that is most specific to the circumstances of the payment. However, this general rule is subject to the specific rules in the table, and the specific rule in subsection (3).
|
Specific rules for determining priority among withholding provisions |
|||
|
Item |
Apply: |
Which is about: |
In priority to: |
|
1AA |
section 12‑385 or 12‑390 |
distributions to foreign residents from * managed investment trusts |
each other withholding provision |
|
1 |
section 12‑35, 12‑40, 12‑45, 12‑47 or 12‑50 |
a payment for work or services |
section 12‑60 (payment under a labour hire arrangement or specified by regulations); or section 12‑190 (payment for a supply where recipient does not quote its ABN) |
|
1A |
section 12‑35 or 12‑45 |
a payment for work or services |
section 12‑47 (a payment to a * religious practitioner) |
|
2 |
section 12‑80, 12‑85 or 12‑90 |
a * superannuation benefit, an annuity, an * employment termination payment or an unused leave payment |
section 12‑60 (payment under a labour hire arrangement or specified by regulations); or section 12‑190 (payment for a supply where recipient does not quote its ABN) |
|
3 |
section 12‑110, 12‑115 or 12‑120 |
a payment of benefit or compensation |
section 12‑60 (payment under a labour hire arrangement or specified by regulations); or section 12‑190 (payment for a supply where recipient does not quote its ABN) |
|
4 |
section 12‑60 |
a payment under a labour hire arrangement or specified by regulations |
section 12‑190 (payment for a supply where recipient does not quote its ABN) |
|
5 |
section 12‑140 or 12‑145 |
a payment arising from investment where the recipient does not quote tax file number |
section 12‑210, 12‑215, 12‑245, 12‑250 or 12‑255 (payment of a dividend or interest) |
|
6 |
section 12‑280 or 12‑285 |
a payment of royalty |
section 12‑325 (natural resource payment) |
(3) Apply a provision in this Division (apart from a provision in Subdivision 12‑FB) that covers a payment in priority to a provision in Subdivision 12‑FB that also covers the payment.
Note: Some provisions of this Division clearly do not cover a payment covered by some other provisions. For example:
* Section 12‑55 (about voluntary agreements) covers a payment only if no other provision requires the payer to withhold an amount from the payment.
12‑7 Division does not apply to alienated personal services payments
(1) This Division (other than the provisions mentioned in subsection (2)) does not apply to a payment in so far as the payment:
(a) is an * alienated personal services payment; or
(b) was received, by the entity making the payment, as an * alienated personal services payment.
Note: An entity that receives an alienated personal services payment may be obliged to pay an amount to the Commissioner: see Division 13.
(2) The provisions are:
(a) Subdivision 12‑FB; and
(b) any other provisions in this Division to the extent that they apply in relation to that Subdivision.
12‑10 Division does not apply to non‑cash benefits
This Division does not apply to a payment in so far as it consists of providing a * non‑cash benefit.
Note: If a non‑cash benefit is provided in circumstances where a payment would give rise to a withholding obligation, the provider must pay an amount to the Commissioner: see Division 14.
12‑20 Application of Division and regulations to non‑share dividends
This Division and the regulations made for the purposes of this Division:
(a) apply to a non‑share equity interest in the same way as it applies to a share; and
(b) apply to an equity holder in the same way as it applies to a shareholder; and
(c) apply to a non‑share dividend in the same way as it applies to a dividend.
Subdivision 12‑B -- Payments for work and services
Table of sections
12‑35 Payment to employee
12‑40 Payment to company director
12‑45 Payment to office holder
12‑47 Payment to religious practitioners
12‑50 Return to work payment
12‑55 Voluntary agreement to withhold
12‑60 Payment under labour hire arrangement, or specified by regulations
An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee (whether of that or another entity).
For exceptions, see section 12‑ 1.
12‑40 Payment to company director
A company must withhold an amount from a payment of remuneration it makes to an individual:
(a) if the company is incorporated--as a director of the company, or as a person who performs the duties of a director of the company; or
(b) if the company is not incorporated--as a member of the committee of management of the company, or as a person who performs the duties of such a member.
For exceptions, see section 12‑ 1.
12‑45 Payment to office holder
(1) An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as:
(a) a member of an * Australian legislature; or
(b) a person who holds, or performs the duties of, an appointment, office or position under the Constitution or an * Australian law; or
(c) a member of the Defence Force, or of a police force of the Commonwealth, a State or a Territory; or
(d) a person who is otherwise in the service of the Commonwealth, a State or a Territory; or
(e) a member of a * local governing body where there is in effect, in accordance with section 446‑5, a unanimous resolution by the body that the remuneration of members of the body be subject to withholding under this Part.
For exceptions, see section 12‑ 1.
(2) This section does not require an amount to be withheld from a payment to an individual as a member of a * local governing body unless it is one to which paragraph (1)(e) applies.
12‑47 Payment to religious practitioners
An entity must withhold an amount from a payment it makes to a * religious practitioner for an activity, or a series of activities, if:
(a) the activity, or series of activities, is done by the religious practitioner in pursuit of his or her vocation as a religious practitioner; and
(b) the activity, or series of activities, is done by the religious practitioner as a member of a religious institution; and
(c) the payment is made by the entity in the course or furtherance of an * enterprise that the entity * carries on.
An entity must withhold an amount from a payment it makes to an individual if the payment is included in the individual's assessable income under section 15‑3 of the Income Tax Assessment Act 1997 (return to work payments).
For exceptions, see section 12‑1.
12‑55 Voluntary agreement to withhold
(1) An entity must withhold an amount from a payment it makes to an individual if:
(a) the payment is made under an * arrangement the performance of which, in whole or in part, involves the performance of work or services (whether or not by the individual); and
(b) no other provision of this Division requires the entity to withhold an amount from the payment; and
(c) the entity and the individual are parties to an agreement (the voluntary agreement ) that is in the * approved form and states that this section covers payments under the arrangement mentioned in paragraph (a), or under a series of such arrangements that includes that arrangement; and
(d) the individual has an * ABN that is in force and is * quoted in that agreement.
For exceptions, see section 12‑ 1.
(2) Each party must keep a copy of the voluntary agreement from when it is made until 5 years after the making of the last payment covered by the agreement.
Penalty: 30 penalty units.
Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
(2A) An offence under subsection (2) is an offence of strict liability.
Note: For strict liability , see section 6.1 of the Criminal Code .
(3) A party to the voluntary agreement may terminate it at any time by notifying the other party in writing.
12‑60 Payment under labour hire arrangement, or specified by regulations
(1) An entity that * carries on an * enterprise must withhold an amount from a payment that it makes to an individual in the course or furtherance of the enterprise if:
(a) the enterprise is a * business of arranging for persons to perform work or services directly for clients of the entity, or the enterprise includes a business of that kind that is not merely incidental to the main activities of the enterprise; and
(b) the payment is made under an * arrangement the performance of which, in whole or in part, involves the performance of work or services by the individual directly for a client of the entity, or directly for a client of another entity.
For exceptions, see section 12‑ 1.
Example 1: Staffprovider Ltd keeps a database of skilled persons who are willing for their services to be provided to third parties. Staffprovider arranges with Corporate Pty Ltd to provide to it the services of a computer programmer in return for payment. Staffprovider arranges with Jane for her to do computer programming for Corporate. Staffprovider must withhold amounts under this section from payments it makes to Jane under the arrangement with her.
Example 2: Ian is a solicitor who regularly briefs barristers to represent his clients. Briefing barristers is merely incidental to Ian's main activities as a solicitor, so he does not have to withhold amounts under this section from payments he makes to barristers.
(2) An entity that carries on an * enterprise must withhold an amount from a payment that it makes to an individual in the course or furtherance of the enterprise if the payment is, in whole or in part, for work or services and is of a kind prescribed by the regulations.
For exceptions, see section 12‑ 1.
12‑80 Superannuation income streams and annuities
An entity must withhold an amount from any of the following payments it makes to an individual:
(a) a * superannuation income stream;
(b) an * annuity.
For exceptions, see section 12‑ 1.
12‑85 Superannuation lump sums and employment termination payments
An entity must withhold an amount from any of the following payments it makes to an individual:
(a) a * superannuation lump sum;
(b) an * employment termination payment.
For exceptions, see section 12‑ 1.
An entity must withhold an amount from any of the following payments it makes to an individual:
(a) an * unused annual leave payment;
(b) an * unused long service leave payment, to the extent that the payment is included in the individual's assessable income.
For exceptions, see section 12‑ 1.
Subdivision 12‑D -- Benefit and compensation payments
Table of sections
12‑110 Social Security or other benefit payment
12‑115 Commonwealth education or training payment
12‑120 Compensation, sickness or accident payment
12‑110 Social Security or other benefit payment
(1) An entity must withhold an amount from a payment it makes to an individual if the payment is:
(a) specified in an item of the table in section 52‑10 of the Income Tax Assessment Act 1997 (Social Security payments); or
(b) specified in an item of the table in section 52‑65 of that Act (Veterans' Affairs payments); or
(ba) specified in an item of the table in section 52‑114 of that Act (Military Rehabilitation and Compensation Act payments); or
(c) specified in section 52‑105, 53‑10, 55‑5 or 55‑10 of that Act; or
Note: Payments specified in those provisions of the Income Tax Assessment Act 1997 are made under various Commonwealth laws.
(d) made under Part 3.15A of the Social Security Act 1991.
(2) In working out the amount to be withheld, disregard so much of the payment as is * exempt income of the individual.
12‑115 Commonwealth education or training payment
(1) An entity must withhold an amount from a * Commonwealth education or training payment it makes to an individual.
For exceptions, see subsection (2) and section 12‑1.
(2) In working out the amount to be withheld, disregard so much of the payment as is * exempt income of the individual.
12‑120 Compensation, sickness or accident payment
An entity must withhold an amount from a payment of compensation, or of sickness or accident pay, it makes to an individual if the payment:
(a) is made because of that or another individual's incapacity for work; and
(b) is calculated at a periodical rate; and
(c) is not a payment made under an insurance policy to the policy owner.
For exceptions, see section 12‑ 1.
Subdivision 12‑E -- Payments where TFN or ABN not quoted
Table of sections
Payment in respect of investment
12‑140 Recipient does not quote tax file number
12‑145 Investor becoming presently entitled to income of a unit trust
12‑150 Limited application of section 12‑140 to payment under financial arrangement
12‑155 When investor may quote ABN as alternative
12‑160 Investment body unaware that exemption from quoting TFN has stopped applying
12‑165 Exception for fully franked dividend
12‑170 Exception for payments below thresholds set by regulations
Payment for a supply
12‑190 Recipient does not quote ABN
Payment in respect of investment
12‑140 Recipient does not quote tax file number
(1) An * investment body must withhold an amount from a payment it makes to another entity in respect of a * Part VA investment if:
(a) all or some of the payment is * ordinary income or * statutory income of the other entity; and
(b) if the investment is non‑transferable--the other entity did not * quote its * tax file number in connection with the investment before the time when the payment became payable; and
(c) if the investment is transferable--the other entity did not quote its tax file number in connection with the investment before the time when the other entity had to be registered with the investment body as the * investor to be entitled to the payment.
Payment in respect of units in a trust or investment‑related betting chance
(2) If a * Part VA investment consists of:
(a) units in a unit trust (as defined in section 202A of the Income Tax Assessment Act 1936 ); or
(b) an investment‑related betting chance;
an entity (including the * investment body) must withhold an amount from a payment it makes to another entity in respect of the investment if the conditions in subsection (1) of this section are met.
For exceptions to the rules in this section, see sections 12‑150 to 12‑170.
12‑145 Investor becoming presently entitled to income of a unit trust
(1) This section applies if:
(a) a * Part VA investment consists of units in a unit trust (as defined in section 202A of the Income Tax Assessment Act 1936 ); and
(b) the * investor becomes presently entitled, for the purposes of Division 6 of Part III of the Income Tax Assessment Act 1936 , to a share of income of the trust at a time (the entitlement time ) before any of that share is paid to the investor.
(2) The entity (including the * investment body) that would have to pay that share to the * investor if the share were due and payable at the entitlement time must withhold from the share, at that time, the amount (if any) that subsection 12‑140(2) would have required it to withhold if it had paid the share to the investor at that time.
For exceptions to the rules in this section, see sections 12‑155 to 12‑170.
(3) This Part (except section 12‑140 and this section) applies as if that entity had paid that share to the * investor at the entitlement time.
(4) If that entity withholds an amount from that share as required by subsection (2), subsection 12‑140(2) does not require an amount to be withheld from a payment of all or part of that share to the * investor.
12‑150 Limited application of section 12‑140 to payment under financial arrangement
(1) This section limits the extent to which section 12‑140 applies to a payment in respect of a * Part VA investment if the investment is a qualifying security (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 (about gains accruing on securities)) and:
(a) is of a kind mentioned in item 1 or 2 of the table in subsection 202D(1) of that Act; or
(b) is of a kind mentioned in item 3 of that table and is non‑transferable.
Note: Section 202D of the Income Tax Assessment Act 1936 lists the investments in connection with which tax file numbers are to be quoted.
(2) Section 12‑140 applies to the payment only to the extent that is covered by one or both of these paragraphs:
(a) so much of the payment as consists of periodic interest (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 );
(b) if the payment became payable at the end of the term (within the meaning of that Division) of the investment--so much of the payment as does not exceed what section 159GQ of that Act would include in the * investor's assessable income for the income year in which that term ended.
Note: This limitation ensures that an amount is not withheld from payment of an amount in respect of which TFN withholding tax is payable. See Subdivision 14‑B.
(3) The adoption (under section 18 of the Income Tax Assessment Act 1936 ) of an accounting period ending on a day other than 30 June is disregarded for the purposes of:
(a) paragraph (2)(b) of this section; and
(b) the application of Division 16E of Part III of that Act for the purposes of that paragraph.
12‑155 When investor may quote ABN as alternative
Section 12‑140 or 12‑145 does not require an amount to be withheld if:
(a) the other entity made the investment in the course or furtherance of an * enterprise * carried on by it; and
(b) the other entity has an * ABN, and has * quoted it to the investment body, by the time referred to in paragraph 12‑140(1)(b) or (c).
12‑160 Investment body unaware that exemption from quoting TFN has stopped applying
Section 12‑140 or 12‑145 does not require an amount to be withheld if:
(a) a provision of Division 5 of Part VA of the Income Tax Assessment Act 1936 has applied to the other entity in relation to the investment, but no longer applies when the payment is made; and
(b) when the payment is made, the * investment body has not been informed of anything that resulted in the provision no longer applying.
Note: Division 5 of Part VA of that Act provides, in certain cases, that even though an entity has not quoted its tax file number it is taken to have done so.
12‑165 Exception for fully franked dividend
Section 12‑140 does not require an amount to be withheld if:
(a) the investment consists of * shares in a public company (as defined in section 202A of the Income Tax Assessment Act 1936 ); and
(b) the payment is a * distribution that has been franked in accordance with section 202‑5 of the Income Tax Assessment Act 1997 ; and
(c) the * franking percentage for the distribution is 100%.
12‑170 Exception for payments below thresholds set by regulations
(1) Section 12‑140 or 12‑145 does not require an amount to be withheld if the payment is less than the amount worked out under the regulations.
(2) Regulations made for the purposes of this section may deal differently with different payments.
12‑190 Recipient does not quote ABN
(1) An entity (the payer ) must withhold an amount from a payment it makes to another entity if:
(a) the payment is for a * supply that the other entity has made, or proposes to make, to the payer in the course or furtherance of an * enterprise * carried on in Australia by the other entity; and
(b) none of the exceptions in this section applies.
ABN correctly quoted
(2) The payer need not withhold an amount under this section if, when the payment is made:
(a) the other entity has given the payer an * invoice that relates to the * supply and * quotes the other entity's * ABN; or
(b) the payer has some other document relating to the supply on which the other entity's ABN is * quoted.
(2A) The payer need not withhold an amount under this section if the other entity has made the * supply, or proposes to make the supply, through an agent and, when the payment is made:
(a) the agent has given the payer an * invoice that relates to the supply and * quotes the agent's * ABN; or
(b) the payer has some other document relating to the supply on which the agent's ABN is * quoted.
Payer has no reason to believe that ABN has been incorrectly quoted
(3) The payer need not withhold an amount under this section if, when the payment is made:
(a) the other entity has given the payer an * invoice that relates to the * supply and purports to * quote the other entity's * ABN, or the payer has some other document that relates to the supply and purports to * quote the other entity's ABN; and
(b) the other entity does not have an ABN, or the invoice or other document does not in fact quote the other entity's ABN; and
(c) the payer has no reasonable grounds to believe that the other entity does not have an ABN, or that the invoice or other document does not quote the other entity's ABN.
(3A) The payer need not withhold an amount under this section if the other entity has made the * supply, or proposes to make the supply, through an agent and, when the payment is made:
(a) the agent has given the payer an * invoice that relates to the supply and purports to * quote the agent's * ABN, or the payer has some other document that relates to the supply and purports to * quote the agent's ABN; and
(b) the agent does not have an ABN, or the invoice or other document does not in fact quote the agent's ABN; and
(c) the payer has no reasonable grounds to believe that the agent does not have an ABN, or that the invoice or other document does not quote the agent's ABN.
No need to quote ABN
(4) The payer need not withhold an amount under this section if:
(a) the payment is made otherwise than in the course or furtherance of an * enterprise * carried on in Australia by the payer; or
(b) the payment (disregarding so much of it as relates to * GST payable on the * supply) or, if the payer has also made, or proposes to make, one or more other payments to the other entity for the supply, the total of all the payments (disregarding so much of them as relates to * GST payable on the supply) does not exceed $50 or such higher amount as is specified in regulations in force for the purposes of subsection 29‑80(1) of the * GST Act; or
(c) the supply is made in the course or furtherance of an activity, or series of activities, done as a member of a local governing body established by or under a * State law or * Territory law; or
(d) the supply is wholly * input taxed.
(5) The payer need not withhold an amount under this section if the payment:
(a) is covered by section 12‑140 or 12‑145 (about not quoting * tax file number in respect of an investment in respect of which the payment is made); or
(b) would be covered by section 12‑140 or 12‑145 if the other entity had not quoted as mentioned in subsection 12‑140(1) or section 12‑155; or
(c) would be covered by section 12‑140 or 12‑145 apart from section 12‑160, 12‑165 or 12‑170 (which are exceptions to sections 12‑140 and 12‑145).
(6) The payer need not withhold an amount under this section if, when the payment is made:
(a) the other entity is an individual and has given the payer a written statement to the effect that:
(i) the * supply is made in the course or furtherance of an activity, or series of activities, done as a private recreational pursuit or hobby; or
(ii) the supply is, for the other entity, wholly of a private or domestic nature; and
(b) the payer has no reasonable grounds to believe that the statement is false or misleading in a material particular.
(7) In working out, for the purposes of this section, whether an enterprise is * carried on in Australia:
(a) ignore the external Territories; and
(b) treat an installation (within the meaning of the Customs Act 1901 ) that is deemed by section 5C of the Customs Act 1901 to be part of Australia, as part of Australia.
Note: The effect of this subsection is to treat an enterprise as carried on in Australia only where it would be treated as carried on in Australia under the A New Tax System (Australian Business Number) Act 1999 .
Subdivision 12‑F -- Dividend, interest and royalty payments
Table of sections
Dividends
12‑210 Dividend payment to overseas person
12‑215 Dividend payment received for foreign resident
12‑220 Application to part of a dividend
12‑225 Application to distribution by a liquidator or other person
Interest
12‑245 Interest payment to overseas person
12‑250 Interest payment received for foreign resident
12‑255 Interest payment derived by lender in carrying on business through overseas permanent establishment
12‑255 Interest payment derived by lender in carrying on business through overseas permanent establishment
12‑260 Lender to notify borrower if interest derived through overseas permanent establishment
Royalties
12‑280 Royalty payment to overseas person
12‑285 Royalty payment received for foreign resident
General
12‑300 Limits on amount withheld under this Subdivision
12‑210 Dividend payment to overseas person
A company that is an Australian resident must withhold an amount from a * dividend it pays if:
(a) according to the register of the company's members, the entity, or any of the entities, holding the * shares on which the dividend is paid has an address outside Australia; or
(b) that entity, or any of those entities, has authorised or directed the company to pay the dividend to an entity or entities at a place outside Australia.
For limits on the amount to be withheld, see section 12‑300.
12‑215 Dividend payment received for foreign resident
(1) An entity that receives a payment of a * dividend of a company that is an Australian resident must withhold an amount from the dividend if:
(a) the entity is a person in Australia or an * Australian government agency; and
(b) a foreign resident is or becomes entitled:
(i) to receive the dividend or part of it from the entity, or to receive the amount of the dividend or of part of it from the entity; or
(ii) to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the dividend or part of it, or the amount of the dividend or of part of it.
For limits on the amount to be withheld, see section 12‑300.
(2) The entity must withhold the amount:
(a) if the foreign resident is so entitled when the entity receives the payment--immediately after the entity receives the payment; or
(b) if the foreign resident becomes so entitled after the entity receives the payment--immediately after the foreign resident becomes so entitled.
12‑220 Application to part of a dividend
This Part applies to a part of a * dividend in the same way as to a dividend.
12‑225 Application to distribution by a liquidator or other person
This Part applies to a distribution that section 47 of the Income Tax Assessment Act 1936 treats as a * dividend paid by a company, in the same way as this Part applies to a dividend paid by the company, and as if the liquidator or other person making the distribution were the company.
12‑245 Interest payment to overseas person
An entity must withhold an amount from interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) it pays to an entity, or to entities jointly, if:
(a) the recipient or any of the recipients has an address outside Australia according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the interest relates; or
(b) the payer is authorised to pay the interest at a place outside Australia (whether to the recipient or any of the recipients or to anyone else).
For limits on the amount to be withheld, see section 12‑300.
12‑250 Interest payment received for foreign resident
(1) An entity that receives a payment of interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) must withhold an amount from the payment if:
(a) the entity is a person in Australia or an * Australian government agency; and
(b) a foreign resident is or becomes entitled:
(i) to receive the interest or part of it from the entity, or to receive the amount of the interest or of part of it from the entity; or
(ii) to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the interest or part of it, or the amount of the interest or of part of it.
For limits on the amount to be withheld, see section 12‑300.
(2) The entity must withhold the amount:
(a) if the foreign resident is so entitled when the entity receives the payment--immediately after the entity receives the payment; or
(b) if the foreign resident becomes so entitled after the entity receives the payment--immediately after the foreign resident becomes so entitled.
An entity must withhold an amount from interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) it pays if it has been notified under section 12‑260 of this Act that this section applies to the interest.
Note: For limits on the amount to be withheld, see section 12‑300.
12‑260 Lender to notify borrower if interest derived through overseas permanent establishment
(1) If:
(a) interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) is payable to:
(i) an entity that is, or entities at least one of whom is, an Australian resident; or
(ii) an * Australian government agency; and
(b) the entity liable to pay the interest is authorised to pay it at a place in Australia (whether to any of those entities or the agency, or to anyone else); and
(c) the interest is or will be * derived by any of those entities or the agency in carrying on business in a country outside Australia at or through a * permanent establishment it has in that country;
those entities, or the agency, must notify the entity liable to pay the interest that section 12‑255 applies to the interest.
(2) The notice must be given in writing, before the entities, or the agency, enter into the transaction in relation to which the interest is payable, or within one month afterwards.
(3) Immediately after giving the notice, those entities, or the agency, must notify the Commissioner of:
(a) the particulars of the transaction (including the dates on which interest is payable under it); and
(b) the day when the notice was given to the entity liable to pay the interest.
Failure to comply with this section may contravene section 8C of this Act.
12‑280 Royalty payment to overseas person
An entity must withhold an amount from a * royalty it pays to an entity, or to entities jointly, if:
(a) the recipient or any of the recipients has an address outside Australia according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the royalty relates; or
(b) the payer is authorised to pay the royalty at a place outside Australia (whether to the recipient or any of the recipients or to anyone else).
For limits on the amount to be withheld, see section 12‑300.
12‑285 Royalty payment received for foreign resident
(1) An entity that receives a payment of a * royalty must withhold an amount from the payment if:
(a) the entity is a person in Australia or an * Australian government agency; and
(b) a foreign resident is or becomes entitled:
(i) to receive the royalty or part of it from the entity, or to receive the amount of the royalty or of part of it from the entity; or
(ii) to have the entity credit to the foreign resident, or otherwise deal with on the foreign resident's behalf or as the foreign resident directs, the royalty or part of it, or the amount of the royalty or of part of it.
For limits on the amount to be withheld, see section 12‑300.
(2) The entity must withhold the amount:
(a) if the foreign resident is so entitled when the entity receives the payment--immediately after the entity receives the payment; or
(b) if the foreign resident becomes so entitled after the entity receives the payment--immediately after the foreign resident becomes so entitled.
12‑300 Limits on amount withheld under this Subdivision
This Subdivision does not require an entity:
(a) to withhold an amount from a * dividend, from interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) or from a * royalty if no * withholding tax is payable in respect of the dividend, interest or royalty; or
(b) to withhold from a dividend, from interest (within the meaning of that Division) or from a royalty more than the withholding tax payable in respect of the dividend, interest or royalty (reduced by each amount already withheld from it under this Subdivision).
Note: Section 128B of the Income Tax Assessment Act 1936 deals with withholding tax liability.
Subdivision 12‑FA -- Departing Australia superannuation payments
Table of sections
12‑305 Departing Australia superannuation payment
12‑310 Limits on amount withheld under this Subdivision
12‑305 Departing Australia superannuation payment
An entity must withhold an amount from a * departing Australia superannuation payment it pays to an entity.
12‑310 Limits on amount withheld under this Subdivision
This Subdivision does not require an entity:
(a) to withhold an amount from a * departing Australia superannuation payment if no * withholding tax is payable in respect of the payment; or
(b) to withhold from a departing Australia superannuation payment more than the withholding tax payable in respect of the payment (reduced by each amount already withheld from it under this Subdivision).
Note: Section 301‑ 175 of the Income Tax Assessment Act 1997 deals with the withholding tax liability.
Subdivision 12‑FAA -- Excess untaxed roll‑over amount [ see Note 2]
Table of sections
12‑312 Untaxed roll‑over superannuation benefits
12‑313 Limits on amount withheld under this Subdivision
12‑312 Untaxed roll‑over superannuation benefits
An entity must withhold an amount from an * excess untaxed roll‑over amount it pays to an entity.
Note: An excess untaxed roll‑over amount is an amount that may form part of a roll‑over superannuation benefit that includes an element untaxed in the fund: see section 306‑15 of the Income Tax Assessment Act 1997 .
12‑313 Limits on amount withheld under this Subdivision
This Subdivision does not require an entity:
(a) to withhold an amount from an * excess untaxed roll‑over amount if no * withholding tax is payable on the amount; or
(b) to withhold from an excess untaxed roll‑over amount more than the withholding tax payable on the amount (reduced by each amount already withheld from the excess untaxed roll‑over amount under this Subdivision).
Note: Section 306‑15 of the Income Tax Assessment Act 1997 deals with liability to this form of withholding tax.
Subdivision 12‑FB -- Payments to foreign residents etc.
Table of sections
12‑315 Payment to foreign resident etc.
12‑317 Payment received for foreign resident etc.
12‑319 Exemptions from withholding obligations under this Subdivision
12‑315 Payment to foreign resident etc.
(1) An entity (the payer ) that * carries on an * enterprise must withhold an amount from a payment it makes to another entity, or to other entities jointly, in the course or furtherance of the enterprise if:
(a) the entity receiving the payment, or any of the entities receiving the payment, is an entity covered by subsection (2); and
(b) the payment is of a kind set out in the regulations; and
(c) the payment is not:
(i) a * dividend of a company; or
(ii) interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ); or
(iii) a * royalty; or
(iv) a * departing Australia superannuation payment; or
(v) a payment worked out wholly or partly by reference to the value or quantity of * natural resources produced or recovered in Australia; or
(vi) a * mining payment; or
(vii) an amount represented by or reasonably attributable to a * fund payment; and
(d) the entity receiving the payment is not covered by an exemption in force under subsection 12‑319(1), or at least one of the entities receiving the payment is not covered by an exemption in force under that subsection.
(2) An entity is covered by this subsection if any of the following conditions is satisfied:
(a) the entity is a foreign resident;
(b) the payer believes, or has reasonable grounds to believe, that the entity is a foreign resident;
(c) the payer has no reasonable grounds to believe that the entity is an Australian resident, and either:
(i) the entity has an address outside Australia (according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, about the transaction to which the payment relates); or
(ii) the payer is authorised to make the payment at a place outside Australia (whether to the entity or to anyone else);
(d) the entity has a connection outside Australia of a kind set out in the regulations.
(3) Before the Governor‑General makes a regulation for the purposes of paragraph (1)(b), the Minister must be satisfied that each payment set out in the regulation is a payment of a kind that could reasonably be related to assessable income of foreign residents.
12‑317 Payment received for foreign resident etc.
(1) An entity (the intermediary ) that receives a payment meeting the requirements set out in paragraphs 12‑315(1)(b) and (c) must withhold an amount from the payment if:
(a) the intermediary is a person in Australia or an * Australian government agency; and
(b) another entity (the likely foreign recipient ) is or becomes entitled:
(i) to receive the payment or part of it from the intermediary, or to receive the amount of the payment or of part of it from the intermediary; or
(ii) to have the intermediary credit to the likely foreign recipient, or otherwise deal with on the likely foreign recipient's behalf or as the likely foreign recipient directs, the payment or part of it, or the amount of the payment or of part of it; and
(c) the likely foreign recipient is covered by subsection (3); and
(d) the likely foreign recipient is not covered by an exemption in force under subsection 12‑319(1).
(2) The intermediary must withhold the amount:
(a) if the likely foreign recipient is so entitled when the intermediary receives the payment--just after the intermediary receives the payment; or
(b) if the likely foreign recipient becomes so entitled after the intermediary receives the payment--just after the likely foreign recipient becomes so entitled.
(3) The likely foreign recipient is covered by this subsection if any of the following conditions is satisfied:
(a) the likely foreign recipient is a foreign resident;
(b) the intermediary believes, or has reasonable grounds to believe, that the likely foreign recipient is a foreign resident;
(c) the intermediary has no reasonable grounds to believe that the likely foreign recipient is an Australian resident, and either:
(i) the likely foreign recipient has an address outside Australia (according to any record that is in the intermediary's possession, or is kept or maintained on the intermediary's behalf); or
(ii) the intermediary is authorised to forward the payment to a place outside Australia (whether to the likely foreign recipient or to anyone else);
(d) the likely foreign recipient has a connection outside Australia of a kind set out in the regulations.
12‑319 Exemptions from withholding obligations under this Subdivision
(1) The Commissioner may grant an entity an exemption in writing for the purposes of paragraphs 12‑315(1)(d) and 12‑317(1)(d) if the Commissioner is satisfied that:
(a) the entity has an established history of compliance with its obligations under * taxation laws; and
(b) the entity is likely to continue to comply with those obligations in the future.
(2) The exemption is in force during the period:
(a) beginning when the Commissioner grants the exemption; and
(b) ending at the time specified in the exemption.
(3) Without limiting the matters to which the Commissioner may have regard in deciding whether to grant an entity an exemption, the Commissioner may have regard to the following:
(a) whether the entity is or was liable to pay an instalment under Division 45 at any time in:
(i) the income year in which the exemption is proposed to be granted; and
(ii) the previous 2 income years;
(b) the amount (if any) of the entity's * tax‑related liabilities that are currently due and payable;
(c) the extent to which the entity and its * associates (if any) have complied with their obligations under * taxation laws during:
(i) the income year in which the exemption is proposed to be granted; and
(ii) the previous 2 income years.
(4) The Commissioner must give a copy of the exemption to the entity to which it relates.
(5) A failure to comply with subsection (4) does not affect the validity of the exemption.
Subdivision 12‑G -- Payments in respect of mining on Aboriginal land, and natural resources
Table of sections
Mining on Aboriginal land
12‑320 Mining payment
Natural resources
12‑325 Natural resource payment
12‑330 Payer must ask Commissioner how much to withhold
12‑335 Commissioner may exempt from section 12‑330, subject to conditions
(1) An entity must withhold an amount from a * mining payment that:
(a) it makes to another entity; or
(b) it applies for the benefit of another entity.
(2) Subsection (1) does not require the entity to withhold more than the * mining withholding tax payable in respect of the * mining payment.
Note: Section 128V of the Income Tax Assessment Act 1936 deals with mining withholding tax liability.
12‑325 Natural resource payment
(1) An entity must withhold an amount from a payment it makes to a foreign resident, or to 2 or more entities at least one of which is a foreign resident, if the payment is worked out wholly or partly by reference to the value or quantity of * natural resources produced or recovered in Australia.
(2) The amount to be withheld is:
(a) the amount notified by the Commissioner under section 12‑330; or
(b) the amount worked out under a certificate in force under section 12‑335 that covers the payment;
as appropriate.
Exception
(3) Subsection (1) does not apply if:
(a) the Commissioner has notified the entity under section 12‑330 that the entity does not need to withhold an amount from the payment; or
(b) a certificate in force under section 12‑335 covers the payment and does not require the entity to withhold an amount from it.
12‑330 Payer must ask Commissioner how much to withhold
(1) An entity must not intentionally make a payment from which section 12‑325 requires it to withhold an amount, unless:
(a) the entity has notified the Commissioner in writing of the amount of the proposed payment; and
(b) the Commissioner has later notified the entity in writing of the amount (if any) that the entity must withhold from the payment in respect of tax that is or may become payable by a foreign resident to whom the payment is made;
or the payment is covered by a certificate in force under section 12‑335.
Penalty: 20 penalty units.
Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Failure to notify not an offence against section 8C
(2) An entity that fails to notify the Commissioner as required by subsection (1) does not commit an offence against section 8C.
12‑335 Commissioner may exempt from section 12‑330, subject to conditions
(1) The Commissioner may give an entity a written certificate exempting the entity from complying with section 12‑330 for specified payments.
(2) A certificate is subject to:
(a) a condition that the entity must withhold from a payment covered by the certificate the amount (if any) worked out in accordance with the certificate in respect of tax that is or may become payable by a foreign resident to whom the payment is made; and
(b) such other conditions as the certificate specifies.
However, the entity does not contravene subsection 12‑330(1) because it contravenes a condition.
(3) The Commissioner may, by written notice given to the entity:
(a) revoke a certificate, whether or not a condition of it has been contravened; or
(b) vary a certificate by revoking, changing or adding to its conditions.
Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC.
Subdivision 12‑H -- Distributions of managed investment trust income
12‑375 What this Subdivision is about
A managed investment trust may be required to withhold an amount from a payment of its Australian sourced net income (other than dividends, interest and royalties) if the payment is made to an entity whose address, or place for payment, is outside Australia. If the payment is made to another entity, the managed investment trust is required to make information available to the recipient outlining certain details in relation to the payment.
If a custodian receives a payment that is covered by that information, it is required to withhold an amount from any related later payment to an entity whose address, or place for payment, is outside Australia. If the later payment is made to another entity, the custodian is required to make information available in relation to that later payment.
If an entity that is not a custodian receives a payment that is covered by that information, it is required to withhold an amount from that payment if a foreign resident becomes entitled to that payment. If a resident becomes entitled to the payment, the entity must make information available in relation to that payment.
Where there is an obligation to withhold, the applicable withholding rate is determined by the nature of the country or territory in which the recipient's address, place for payment or residency is located.
Table of sections
Operative provisions
12‑385 Withholding by managed investment trusts
12‑390 Withholding by custodians and other entities
12‑395 Requirement to give notice or make information available
12‑400 Meaning of managed investment trust
12‑405 Meaning of fund payment
12‑410 Entity to whom payment is made
12‑415 Failure to give notice or make information available: administrative penalty
12‑420 Agency rules
12‑385 Withholding by managed investment trusts
(1) A trustee of a trust that is a * managed investment trust in relation to an income year that makes a * fund payment in relation to that income year to an entity covered by section 12‑410 must withhold an amount from the payment.
Note 1: An entity may be covered by section 12‑410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia.
Note 2: If the payment is made to a recipient not covered by section 12‑410, the trustee is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section 12‑395.
(2) The amount the trustee must withhold is:
(3) The rate is:
(a) if the address or place for payment of the recipient is in an * information exchange country:
(i) 22.5% for * fund payments in relation to the first income year starting on or after the first 1 July after the day on which the Tax Laws Amendment (Election Commitments No. 1) Act 2008 receives the Royal Assent; or
(ii) 15% for fund payments in relation to the following income year; or
(iii) 7.5% for fund payments in relation to later income years; or
(b) otherwise--30%.
(4) An information exchange country is a foreign country or foreign territory specified in the regulations for the purposes of this section.
(5) This section does not apply to an amount paid by a * managed investment trust to the extent that no * managed investment trust withholding tax is payable in respect of the payment or an amount reasonably attributable to the payment.
12‑390 Withholding by custodians and other entities
Withholding by custodians
(1) A * custodian must withhold an amount from a payment (the later payment ) it makes if:
(a) all or some of the later payment (the covered part ) is reasonably attributable to the part of an earlier payment received by the custodian that was covered by a notice or information under section 12‑395; and
(b) the later payment is made to an entity covered by section 12‑410.
Note 1: The covered part referred to in paragraph (1)(a) is attributable to a fund payment made by a managed investment trust, or 2 or more fund payments made by one or more managed investment trusts.
Note 2: An entity may be covered by section 12‑410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia.
Note 3: If the payment is made to a recipient not covered by section 12‑410, the custodian is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section 12‑395.
(2) The amount the * custodian must withhold is:
(3) The rate is:
(a) if the address or place for payment of the recipient is in an * information exchange country:
(i) 22.5% for * fund payments in relation to the first income year starting on or after the first 1 July after the day on which the Tax Laws Amendment (Election Commitments No. 1) Act 2008 receives the Royal Assent; or
(ii) 15% for fund payments in relation to the following income year; or
(iii) 7.5% for fund payments in relation to later income years; or
(b) otherwise--30%.
Withholding by other entities
(4) An entity that is not a * managed investment trust or a * custodian must withhold an amount from a payment it receives if:
(a) the payment or part of it (the covered part ) was covered by a notice or information under section 12‑395; and
(b) a foreign resident (the recipient ) is or becomes entitled:
(i) to receive from the entity; or
(ii) to have the entity credit to the recipient, or otherwise deal with on the recipient's behalf or as the recipient directs;
an amount (the attributable amount ) reasonably attributable to the covered part.
Note: If the recipient not a foreign resident, the entity is required to give a notice to the recipient or publish information on a website setting out certain details about the payment: see section 12‑395.
(5) The amount the entity must withhold is:
(6) The rate is:
(a) if the recipient is a resident of an * information exchange country:
(i) 22.5% for * fund payments in relation to the first income year starting on or after the first 1 July after the day on which the Tax Laws Amendment (Election Commitments No. 1) Act 2008 receives the Royal Assent; or
(ii) 15% for fund payments in relation to the following income year; or
(iii) 7.5% for fund payments in relation to later income years; or
(b) otherwise--30%.
(7) An entity is a resident of an * information exchange country if:
(a) the entity is a resident of that country for the purposes of the taxation laws of that country; or
(b) if there are no taxation laws of that country applicable to the entity or the entity's residency status cannot be determined under those laws:
(i) for an individual--the individual is ordinarily resident in that country; or
(ii) for another entity--the entity is incorporated or formed in that country and is carrying on a business in that country.
(8) An amount required to be withheld under subsection (4) must be withheld:
(a) if the recipient is so entitled when the entity receives the payment--immediately after receipt; or
(b) if the recipient becomes so entitled at a later time--immediately after the later time.
Meaning of custodian
(9) An entity is a custodian if the entity is * carrying on a * business that consists predominantly of providing a custodial or depository service (as defined by section 766E of the Corporations Act 2001 ) pursuant to an * Australian financial services licence.
Exceptions
(10) This section does not apply:
(a) to a company unless the company would, apart from section 12‑420, be acting in the capacity as * agent for the recipient; or
(b) to an amount paid or received by an entity to the extent that no * managed investment trust withholding tax is payable in respect of the amount or an amount reasonably attributable to the amount.
12‑395 Requirement to give notice or make information available
Managed investment trusts and custodians
(1) An entity that is a * managed investment trust or a * custodian must comply with subsection (2) if:
(a) the entity makes a payment to another entity (the recipient ) from which an amount would have been required to be withheld under section 12‑385 or subsection 12‑390(1) if the payment had been made to an entity covered by section 12‑410; and
(b) an amount is not required to be withheld from the payment because the recipient is not an entity covered by section 12‑410.
Note: An entity may be covered by section 12‑410 if the entity has an address outside Australia or payment is authorised to be made to a place outside Australia.
(2) The entity must:
(a) give to the recipient a written notice containing the details specified in subsection (3); or
(b) make those details available on a website in a way that the details are readily accessible to the recipient for not less than 5 continuous years.
(3) The notice must be given, or the details must be made available on a website, before or at the time when the payment is made and:
(a) must specify the part of the payment from which an amount would have been so required to have been withheld; and
(b) must specify the income year of the * managed investment trust to which that part relates.
Note: Failure to give the notice or make the details available as required by this section incurs an administrative penalty: see section 12‑415.
Other entities
(4) An entity that is not a * managed investment trust or a * custodian must comply with subsection (5) if:
(a) the entity receives a payment; and
(b) another entity (also the recipient ) is or becomes entitled:
(i) to receive from the entity; or
(ii) to have the entity credit to the recipient, or otherwise deal with on the recipient's behalf or as the recipient directs;
an amount attributable to the payment; and
(c) the entity would have been required to withhold an amount from the payment under subsection 12‑390(4) if the recipient had been a foreign resident; and
(d) an amount is not required to be withheld from the payment because the recipient is not a foreign resident.
(5) The entity must:
(a) give to the recipient a written notice containing the details specified in subsection (6); or
(b) make those details available on a website in a way that the details are readily accessible to the recipient for not less than 5 continuous years.
(6) The notice must be given, or the details must be made available on a website, before or at the time when the amount is paid or credited to the recipient, or is dealt with on the recipient's behalf or as the recipient directs, and:
(a) must specify the part of the payment referred to in paragraph (4)(a) from which an amount would have been so required to have been withheld; and
(b) must specify the income year of the * managed investment trust to which that part relates.
Note: Failure to give the notice or make the details available as required by this section incurs an administrative penalty: see section 12‑415.
12‑400 Meaning of managed investment trust
(1) A trust is a managed investment trust in relation to an income year if:
(a) the trustee of the trust makes the first * fund payment in relation to the income year; and
(b) the conditions in this table are satisfied.
|
Conditions to be satisfied |
|
|
Item |
Condition |
|
1 |
At the time the payment is made, or at an earlier time in the income year: (a) a trustee was an Australian resident; or (b) the central management and control of the trust was in Australia. |
|
2 |
At the time the payment is made, the trust is a managed investment scheme (as defined by section 9 of the Corporations Act 2001 ) and is operated by a financial services licensee (as defined by section 761A of that Act) whose licence covers operating such a managed investment scheme. |
|
3 |
At the time the payment is made: (a) units in the trust are listed for quotation in the official list of an * approved stock exchange in Australia; or (b) the trust has at least 50 * members (ignoring objects of a trust); or (c) one of the entities covered by a paragraph of subsection (2) is a member of the trust. |
(2) These are the entities:
(a) a * life insurance company;
(b) a * complying superannuation fund, a * complying approved deposit fund or a * foreign superannuation fund, being a fund that has at least 50 * members;
(c) a trust for which the conditions in table items 1 and 2 in subsection (1), and the condition in paragraph (a) or (b) of table item 3, are satisfied;
(d) an entity that is recognised, under a * foreign law relating to corporate regulation, as an entity with a similar status to a managed investment scheme and that has at least 50 members;
(e) a trust:
(i) interests in which are owned directly by an entity covered by an earlier paragraph; or
(ii) interests in which are held indirectly by an entity covered by an earlier paragraph through a * chain of trusts;
where the conditions in table items 1 and 2 in subsection (1) are satisfied for the trust, or for each trust in the chain.
Exception: foreign resident individual having a substantial interest
(3) The condition in table item 3 in subsection (1) is not satisfied for a trust at a time if, at that time, one foreign resident individual, directly or indirectly:
(a) held, or had the right to acquire, interests representing 10% or more of the value of the interests in the trust; or
(b) had the control of, or the ability to control, 10% or more of the rights attaching to * membership interests in the trust; or
(c) had the right to receive 10% or more of any distribution of income that the trustee may make.
Start‑up phase
(4) A trust that is created during an income year is a managed investment trust in relation to the income year if, at the time the trustee of the trust makes the first * fund payment in relation to the income year, the conditions in table items 1 and 2 in subsection (1) are satisfied for the trust.
Wind‑up phase
(5) A trust that ceases to exist during an income year is a managed investment trust in relation to the income year if:
(a) at the time the trustee makes the first * fund payment in relation to the income year, the conditions in table items 1 and 2 in subsection (1) are satisfied for the trust; and
(b) the trust was a * managed investment trust in relation to the previous income year otherwise than because of subsection (4).
12‑405 Meaning of fund payment
(1) The object of this section is to ensure that the total of the * fund payments that the trustee of a trust makes in relation to an income year equals, as nearly as practicable, the net income of the trust for the income year, disregarding these amounts ( excluded amounts ):
(a) a dividend (as defined in Division 11A of Part III of the Income Tax Assessment Act 1936 ) that is subject to, or exempted from, a requirement to withhold under Subdivision 12‑F;
(b) interest (as so defined) that is subject to, or exempted from, such a requirement;
(c) a * royalty that is subject to, or exempted from, such a requirement;
(d) a * capital gain or * capital loss from a * CGT event that happens in relation to a * CGT asset that is not * taxable Australian property;
(e) amounts that are not from an * Australian source;
and disregarding deductions relating to excluded amounts.
(2) Work out as follows how much of a payment (the actual payment ) made by the trustee of a trust in relation to an income year is a fund payment in relation to that year:
Method statement
Step 1. Reduce the actual payment by so much of it that is attributable to excluded amounts.
Step 2. Work out what it is reasonable to expect will be the * net income of the trust for the income year:
(a) disregarding excluded amounts, expected excluded amounts and deductions relating to those amounts; and
(b) on the basis that a * capital gain from * taxable Australian property of the trust that was or would be reduced under step 3 of the method statement in subsection 102‑5(1) of the Income Tax Assessment Act 1997 were double the amount it actually is.
Step 3. The fund payment is so much of the step 2 amount as is reasonable having regard to:
(a) the object of this section; and
(b) the step 1 amount; and
(c) the amounts of any earlier fund payments made by the trustee in relation to the income year; and
(d) the expected amounts of any later fund payments the trustee expects to make in relation to the income year.
(3) The expected * net income of the trust and the expected amounts of future * fund payments are to be worked out on the basis of the trustee's knowledge when the actual payment is made.
(4) However, an amount is not a fund payment in relation to the income year unless it is paid:
(a) during the income year; or
(b) within 3 months after the end of the income year; or
(c) within a longer period (starting at the end of the period referred to in paragraph (b) and not exceeding 3 months) allowed by the Commissioner.
(5) The Commissioner may allow a longer period as mentioned in paragraph (4)(c) only if the Commissioner is of the opinion that the trustee was unable to make the payment during the income year, or within 3 months after the end of the income year, because of circumstances beyond the influence or control of the trustee.
12‑410 Entity to whom payment is made
(1) An entity (the recipient ) is covered by this section for a payment made to it by another entity (the payer ) if:
(a) according to any record that is in the payer's possession, or is kept or maintained on the payer's behalf, the recipient has an address outside Australia; or
(b) the payer is authorised to make the payment to a place outside Australia.
(2) However, a recipient is not covered by this section for a payment if, at the time the payment was made, a * business the recipient carries on is carried on at or through an * Australian permanent establishment and the payment is attributable to that establishment.
12‑415 Failure to give notice or make information available: administrative penalty
An entity that:
(a) is required to give a notice, or make details available on a website, under section 12‑395 in relation to:
(i) a payment made to another entity; or
(ii) an amount paid or credited to, or dealt with on behalf of or as directed by, another entity; and
(b) fails to comply with that section;
is liable to pay to the Commissioner a penalty equal to the amount that would have been required to be withheld under this Subdivision (disregarding subsection 12‑385(5) and paragraph 12‑390(10)(b)) in relation to amounts attributable to the payment or amount if the notice had been given or the details had been made available.
Note: Division 298 in this Schedule contains machinery provisions for administrative penalties.
(1) This section applies to:
(a) a payment (the first payment ) made to an entity (the first entity ) in the capacity as * agent for another entity; and
(b) another payment made by the first entity to the extent that it is reasonably attributable to the first payment.
(2) This Subdivision has effect as if the first entity were not an * agent in relation to the payments.
Note: As a result of subsection (2), an agent may be required to withhold amounts under this Subdivision.
Division 13 -- Alienated personal services payments
Table of sections
13‑5 Payment to the Commissioner in respect of alienated personal services payments
13‑10 Alienated personal services payments
13‑15 Personal services payment remitters
13‑20 Time for payments to Commissioner for alienated personal services payments made during 2000‑01
The object of this Division is to ensure the efficient collection of income tax (and other liabilities) on any * personal services income included in an individual's assessable income under Division 86 of the Income Tax Assessment Act 1997 by:
(a) putting * personal services entities receiving * alienated personal services payments in a position similar to their position if amounts were withheld from the payments under Division 12; but
(b) doing so in a way that enables them to comply with their obligations without having to withhold amounts separately from each payment.
Note: Under Division 86 of the Income Tax Assessment Act 1997 (about alienation of personal services income), an individual's personal services income that is gained or produced by another entity is in some cases included in the individual's assessable income. Payments of this income by the entity might not be caught by Division 12.
13‑5 Payment to the Commissioner in respect of alienated personal services payments
Obligation to pay amounts
(1) A * personal services entity must pay an amount of tax to the Commissioner i f:
(a) it receives an * alienated personal services payment that relates to an individual's personal services income; and
(b) it receives the payment during a * PAYG payment period for which it is a * personal services payment remitter.
Working out the amounts
(2) Use this method statement to work out the amount:
Method statement
Step 1. Identify the payments that the * personal services entity makes to the individual during the period mentioned in paragraph (1)(b) that are * withholding payments covered by section 12‑35.
Step 2. Identify the amounts that:
(a) are included in the individual's assessable income under section 86‑15 of the Income Tax Assessment Act 1997 ; and
(b) relate to * alienated personal services payments the entity receives during that period.
Step 3. Work out the sum of all the amounts that Division 12 would require the entity to withhold in respect of that period if both of these were taken into account:
(a) the payments identified in step 1; and
(b) the amounts identified in step 2, as if they were payments of salary covered by section 12‑35.
Step 4. Work out the sum of all the amounts withheld under section 12‑35 from the payments identified in step 1.
Step 5. Subtract the sum under step 4 from the sum under step 3.
Example: For the PAYG payment period of 1 April 2001 to 30 June 2001, NewIT Pty. Ltd. received amounts totalling $18,000 that were Ron's personal services income. NewIT does not conduct a personal services business.
During the period, NewIT paid Ron $3,000 in salary. This is a withholding payment covered by section 12‑35 (step 1).
$15,000 of the amount NewIT received is included in Ron's assessable income under section 86‑15 of the Income Tax Assessment Act 1997 (step 2).
If NewIT had paid the $15,000 in salary to Ron within 14 days after the end of the PAYG payment period, the amount that NewIT would have had to withhold under Division 12 on the total amount of $18,000 would have been $4,000 (step 3).
NewIT withheld $500 from the salary payment of $3,000, as required by section 12‑35 (step 4).
On the basis of these facts, the amount NewIT must pay to the Commissioner (step 5) is:
(3) Subject to subsections (4) and (5), the * personal services entity must pay the amount to the Commissioner by the end of the 21st day after the end of the * PAYG payment period.
Note: A different rule applies for alienated personal services payments that large withholders and medium withholders make during the 2000‑01 income year. See section 13‑20.
(4) If:
(a) the * personal services entity is a * deferred BAS payer on the 21st day after the end of the * PAYG payment period; and
(b) the personal services entity's PAYG payment period is a * quarter;
the entity must pay that amount to the Commissioner as shown in the table:
|
Payments by * deferred BAS payers |
||
|
Item |
If paragraph (4)(a) applies to the * quarter ending on: |
the amount for this quarter must be paid by the end of: |
|
1 |
30 September |
the following 28 October |
|
2 |
31 December |
the following 28 February |
|
3 |
31 March |
the following 28 April |
|
4 |
30 June |
the following 28 July |
(5) If:
(a) the * personal services entity is a * deferred BAS payer on the 21st day after the end of the * PAYG payment period; and
(b) the personal services entity's PAYG payment period is a month;
the entity must pay that amount to the Commissioner:
(c) by the end of the 28th day of the month following that period unless the PAYG payment period is a December; or
(d) by the end of the 28th day of the next February if the PAYG payment period is a December.
13‑10 Alienated personal services payments
An alienated personal services payment is a payment (including a payment in the form of a * non‑cash benefit) that a * personal services entity receives and that relates to an amount that:
(a) is included in an individual's assessable income under Division 86 of the Income Tax Assessment Act 1997 ; or
(b) would be so included but for the fact that the entity received the income in the course of conducting a * personal services business.
For valuation of non‑cash benefits, see sections 21 and 21A of the Income Tax Assessment Act 1936 .
13‑15 Personal services payment remitters
General
(1) A * personal services entity is a personal services payment remitter for a * PAYG payment period if, in the income year preceding that period:
(a) the entity's * ordinary income or * statutory income included a person's * personal services income; and
(b) the entity was not conducting a * personal services business.
Businesses not previously receiving personal services income
(2) A * personal services entity is a personal services payment remitter for a * PAYG payment period if:
(a) the entity's * ordinary income or * statutory income did not include an individual's * personal services income in any income year preceding that period; and
(b) it is reasonable to expect that, in the income year during which the period occurs, the entity's income will include a person's * personal services income that the entity will not have received in the course of conducting a * personal services business.
(3) It is not reasonable to expect that the * personal services entity will receive a person's * personal services income in the course of conducting a * personal services business if it is reasonable to expect that:
(a) the entity will receive at least 80% of that income from the same entity (or one entity and its * associates) ; and
(b) the entity will not meet the results test under section 87‑18 of the Income Tax Assessment Act 1997 .
Personal services business determinations taking effect
(4) However, a * personal services entity is not a personal services payment remitter for a * PAYG payment period if, during that period or an earlier PAYG payment period in the same income year, a * personal services business determination relating to the entity takes effect.
13‑20 Time for payments to Commissioner for alienated personal services payments made during 2000‑01
(1) Subject to subsection (2), if:
(a) a * personal services entity must, under section 13‑ 5, pay an amount for * alienated personal services payments it received during a particular * PAYG payment period; and
(b) the period ends in a * quarter in the * financial year starting on 1 July 2000;
the payment must be paid to the Commissioner by the end of the 21st day after the end of the quarter.
(2) If:
(a) the * personal services entity is a * deferred BAS payer on the 21st day after the end of the * quarter; and
(b) the quarter ends on 31st March or 30th June of 2001;
the payment must be paid to the Commissioner by the end of the 28th day after the end of that quarter.
Division 14 -- Non‑cash benefits, and accruing gains, for which amounts must be paid to the Commissioner
Table of sections
14‑ 1 Object of this Subdivision
14‑5 Provider of non‑cash benefit must pay amount to the Commissioner if payment would be subject to withholding
14‑10 Dividend, interest or royalty received, for a foreign resident, in the form of a non‑cash benefit
14‑15 Payer can recover amount paid to the Commissioner
14‑50 Object of this Subdivision
14‑55 Liability for TFN withholding tax
14‑60 Investment body may recover TFN withholding tax from investor
14‑65 Application of rules in Division 18
14‑75 Overpayment of TFN withholding tax
14‑85 Other laws do not exempt from TFN withholding tax
Subdivision 14‑A -- Non‑cash benefits
14‑1 Object of this Subdivision
The object of this Subdivision is:
(a) to put entities that provide * non‑cash benefits, and entities that receive them, in a position similar to their position under Division 12 if payments of money had been made instead of the non‑cash benefits being provided; and
(b) in that way, to prevent entities from avoiding their obligations under Division 12 by providing non‑cash benefits.
14‑5 Provider of non‑cash benefit must pay amount to the Commissioner if payment would be subject to withholding
(1) An entity (the payer ) must pay an amount to the Commissioner before providing a * non‑cash benefit to another entity (the recipient ) if Division 12 would require the payer to withhold an amount (the notionally withheld amount ) if, instead of providing the benefit to the recipient, the payer made a payment to the recipient in money equal to the * market value of the benefit when the benefit is provided.
(2) The amount to be paid to the Commissioner is equal to the notionally withheld amount.
Example: Nick is a building contractor who has entered into a voluntary agreement with Mike for the purposes of section 12‑55. Nick proposes to give Mike his old utility van (whose market value is $1,000) as payment for work Mike has done for him over a fortnight.
If Nick were instead to pay Mike $1,000, Nick would have had to withhold $203 under Division 12 (in accordance with withholding rates current at the time).
This section requires Nick to pay $203 to the Commissioner before giving the van to Mike.
(3) This section does not apply to providing:
(a) a * fringe benefit; or
(b) a benefit that is an exempt benefit under the Fringe Benefits Tax Assessment Act 1986 ; or
(c) a benefit that would be an exempt benefit under that Act if paragraphs (d) and (e) of the definition of employer in subsection 136(1) of that Act were omitted; or
(d) a benefit constituted by the acquisition of a share or right to acquire a share under an employee share scheme (within the meaning of Division 13A of Part III of the Income Tax Assessment Act 1936 ); or
(e) a benefit constituted by the acquisition under an employee share scheme (within the meaning of that Division) of a stapled security or right to acquire a stapled security that is treated as a qualifying share or qualifying right for the purposes of that Division because of Subdivision DB of that Division.
If:
(a) an entity (the payer ) receives in the form of a * non‑cash benefit:
(i) a * dividend of a company; or
(ii) interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ); or
(iii) a * royalty; and
(b) section 12‑215, 12‑250 or 12‑285 would have required the payer to withhold an amount if the dividend, interest or royalty had been a payment in money;
the payer must pay that amount to the Commissioner before providing the benefit (or part of it) to another entity.
14‑15 Payer can recover amount paid to the Commissioner
(1) The payer may recover from the recipient as a debt an amount that the payer has paid to the Commissioner under section 14‑ 5.
(2) If the payer has paid an amount to the Commissioner under section 14‑ 10, the payer may:
(a) if the payer has provided all of the benefit to another entity-- recover the amount from that other entity as a debt; or
(b) if the payer has provided a part of the benefit to another entity--recover from that other entity as a debt the corresponding proportion of the amount paid to the Commissioner.
(3) If the payer can recover an amount from another entity under this section, the payer is entitled to set the amount off against debts due by the payer to the other entity.
Subdivision 14‑B -- Accruing gains
14‑50 Object of this Subdivision
The object of this Subdivision is to put the parties to a * Part VA investment with an accruing gain in a position similar to what would have been their position under Subdivision 12‑E (Payments where TFN or ABN not quoted) if the * investment body had paid the gain in money to the * investor at the end of the income year.
14‑55 Liability for TFN withholding tax
(1) * TFN withholding tax is payable if:
(a) in relation to a * Part VA investment, an amount (the accrued gain ) is included in the * investor's assessable income for an income year under section 159GQ of the Income Tax Assessment Act 1936 (about gains accruing on securities); and
(b) the investment:
(i) is of a kind mentioned in item 1 or 2 of the table in subsection 202D(1) of that Act; or
(ii) is of a kind mentioned in item 3 of that table and is non‑transferable; and
(c) the term of the investment does not end during the income year; and
(d) section 12‑140 would have required the * investment body to withhold an amount (the TFN withholding amount ) from a payment of the accrued gain to the investor, if the investment body had made the payment at the end of the income year and section 12‑150 had not been enacted.
Note: Section 202D of the Income Tax Assessment Act 1936 lists the investments in connection with which tax file numbers are to be quoted.
(2) The amount of * TFN withholding tax is equal to the TFN withholding amount.
(3) The * TFN withholding tax is payable jointly and severally by the * investor and the * investment body.
(4) However, if the * investment body is the Commonwealth or an * untaxable Commonwealth entity:
(a) the * TFN withholding tax is payable by the * investor; and
(b) the investor is taken to have authorised the investment body to pay the TFN withholding tax on the investor's behalf.
(5) The * TFN withholding tax is due and payable at the end of 21 days after the end of the income year referred to in paragraph (1)(a).
Note 1: When it is due and payable, the TFN withholding tax is payable to the Commissioner: see paragraph 255‑5(1)(b).
Note 2: An entity by whom it is payable must pay it to the Commissioner in accordance with Subdivision 16‑B: see subsection 16‑70(3). If any of it remains unpaid, the entity is liable to pay general interest charge: see section 16‑80.
Note 3: The Commissioner may defer the time at which TFN withholding tax becomes due and payable: see section 255‑ 10.
(6) The adoption (under section 18 of the Income Tax Assessment Act 1936 ) of an accounting period ending on a day other than 30 June is disregarded for the purposes of:
(a) this section; and
(b) the application of Division 16E of Part III of that Act for the purposes of this section.
14‑60 Investment body may recover TFN withholding tax from investor
(1) The * investment body may recover from the * investor as a debt any of the * TFN withholding tax that it pays.
(2) The * investment body is entitled to set off an amount that it can recover from the * investor under this section against:
(a) a debt due by it to the investor; or
(b) an amount that is accruing to the investor, or stands to the investor's credit, in respect of the * Part VA investment, even if the amount is not yet due.
14‑65 Application of rules in Division 18
These provisions:
(a) subsection 18‑15(1) and sections 18‑20 and 18‑25 (about credits for amounts withheld from withholding payments); and
(b) section 18‑80 (about refunds when exemption declaration not given);
apply as if any of the * TFN withholding tax that has been paid were an amount withheld under subsection 12‑140(1) from a * withholding payment covered by that subsection and made to the * investor during:
(c) unless the * investor has adopted (under section 18 of the Income Tax Assessment Act 1936 ) an accounting period ending on a day other than 30 June--the income year referred to in paragraph 14‑55(1)(a); or
(d) if the investor has adopted such an accounting period--the income year in which the TFN withholding tax is paid.
Note: Unless the investor has adopted such an accounting period, the credit under section 18‑ 15, 18‑20 or 18‑25 will be in respect of the income year before the one in which the TFN withholding tax is paid.
14‑75 Overpayment of TFN withholding tax
If * TFN withholding tax has been overpaid:
(a) the Commissioner must refund the amount overpaid; and
(b) the * investor is not entitled to a credit under section 18‑ 15, 18‑20 or 18‑25 in respect of the amount overpaid.
14‑85 Other laws do not exempt from TFN withholding tax
(1) A provision of a law passed before the commencement of this section that purports to exempt an entity from liability to pay * TFN withholding tax, or to pay taxes that include TFN withholding tax, does not exempt that entity from liability to pay TFN withholding tax.
(2) A provision of a law passed at or after the commencement of this section that purports to exempt an entity from liability to pay taxes under the laws of the Commonwealth, or to pay certain taxes under those laws that include * TFN withholding tax, is not to be interpreted as exempting the entity from liability to pay TFN withholding tax, unless it specifically mentions TFN withholding tax.
Division 15 -- Working out the amount to withhold
Table of Subdivisions
Guide to Division 15
15‑A Working out how much to withhold
15‑B Withholding schedules and regulations
15‑C Declarations
15‑1 What this Division is about
This Division is mainly about how to work out how much an entity must withhold under Division 12.
In most cases, the entity will need to use either the Commissioner's withholding schedules or the regulations.
The entity will also need to take into account a TFN declaration or declaration under section 15‑50 it has been given because, under the schedules and regulations, the declaration may affect how to calculate the amount to withhold.
This Division also deals with when an individual can make such a declaration (other than a TFN declaration) so as to change the amount that must be withheld from payments to the individual.
Subdivision 15‑A -- Working out how much to withhold
Table of sections
15‑15 Variation of amounts required to be withheld
(1) The amount that Subdivision 12‑B, 12‑C or 12‑D requires to be withheld from a payment is to be worked out under the withholding schedules made under section 15‑25. However, if the regulations prescribe how the amount is to be worked out, then it is to be worked out under the regulations.
Note 1: A TFN declaration, declaration under section 15‑50 or voluntary agreement may affect how much is required to be withheld under the withholding schedules or regulations.
Note 2: The Commissioner may vary an amount required to be withheld. See section 15‑ 15.
(2) The amount that Subdivision 12‑E, 12‑F, 12‑FA, 12‑FAA, 12‑FB or 12‑G (except one covered by section 12‑325) requires to be withheld from a payment is to be worked out under the regulations.
Note 1: The amount that section 12‑325 requires to be withheld is worked out under that section.
Note 2: The Commissioner may vary an amount required to be withheld. See section 15‑ 15.
(3) The amount that Subdivision 12‑H requires to be withheld from a payment or receipt is worked out under subsection 12‑385(2), 12‑390(2) or 12‑390(5).
15‑15 Variation of amounts required to be withheld
(1) The Commissioner may, for the purposes of meeting the special circumstances of a particular case or class of cases, vary the * amount required to be withheld by an entity from a * withholding payment (except a withholding payment covered by section 12‑140 or 12‑145 or Subdivision 12‑H). If the Commissioner does so, the amount is varied accordingly.
Note: Section 12‑140 is about a payment arising from an investment where the recipient does not quote its tax file number (or, in some cases, its ABN). Section 12‑145 is about an investor becoming presently entitled to income of a unit trust. Subdivision 12‑H is about distributions of managed investment trust income.
(2) The Commissioner's power to vary an amount includes the power to reduce the amount to nil.
(3) A variation must be made by a written notice:
(a) if it applies to a particular entity--that is given to that entity; or
(b) if it applies to a class of entities--that is given to each of the entities, or a copy of which is published in the Gazette .
Subdivision 15‑B -- Withholding schedules and regulations
Table of sections
15‑25 Commissioner's power to make withholding schedules
15‑30 Matters to be considered when making withholding schedules
15‑35 Regulations about withholding
15‑25 Commissioner's power to make withholding schedules
(1) For the purposes of collecting income tax and the other liabilities referred to in paragraphs 11‑1(b), (c), (ca), (da) and (db), the Commissioner may make one or more withholding schedules specifying the amounts, formulas and procedures to be used for working out the * amount required to be withheld by an entity:
(a) from a * withholding payment covered by Subdivision 12‑B, 12‑C or 12‑D; or
(b) an * alienated personal services payment to which Division 13 applies.
(2) A withholding schedule may deal differently with:
(a) different payments; and
(b) different circumstances of the recipients of those payments; and
(c) different periods in respect of which those payments are made.
This subsection does not limit subsection 33(3A) of the Acts Interpretation Act 1901 .
(3) The Commissioner may withdraw a withholding schedule.
(4) A withholding schedule, or the withdrawal of a withholding schedule:
(a) only applies if a notice of it is published in the Gazette ; and
(b) only applies in relation to payments made after the day the notice is published, or after such later day as is specified by the Commissioner in the notice.
(5) The Commissioner must make each withholding schedule publicly available.
15‑30 Matters to be considered when making withholding schedules
The Commissioner must have regard to the following matters when making a withholding schedule:
(a) the rates of income tax as specified in the Income Tax Rates Act 1986 ;
(b) the rates of Medicare levy as specified in the Medicare Levy Act 1986 ;
(c) the rates specified in section 106Q (about repayments of accumulated HEC debts) of the Higher Education Funding Act 1988 for any financial year ending before 1 July 2005;
(ca) the percentages specified in section 154‑20 (about repayments of accumulated HELP debt) of the Higher Education Support Act 2003 for any financial year starting on or after 1 July 2005;
(da) the percentages specified in section 1061ZZFD (about repayments of accumulated FS debts) of the Social Security Act 1991 for any financial year starting on or after 1 July 2006;
(db) the percentages specified in section 12ZLC (about repayments of accumulated FS debts) of the Student Assistance Act 1973 for any financial year starting on or after 1 July 2006;
(d) any prescribed * tax offsets;
(e) the family tax benefit (within the meaning of the A New Tax System (Family Assistance) Act 1999 );
(f) the periods in respect of which * withholding payments are made;
(g) any other prescribed matter.
15‑35 Regulations about withholding
(1) For the purposes of collecting income tax and the other liabilities referred to in section 11‑ 1, the regulations may specify the amounts, formulas and procedures to be used for working out the * amount required to be withheld by an entity from a * withholding payment covered by Division 12 (except one covered by section 12‑325).
(2) The regulations may deal differently with:
(a) different payments; and
(b) different circumstances of the recipients of those payments; and
(c) different periods in respect of which those payments are made.
This subsection does not limit subsection 33(3A) of the Acts Interpretation Act 1901 .
Subdivision 15‑C -- Declarations
Table of sections
15‑50 Declarations
Declarations about prescribed matters
(1) An individual who:
(a) expects to receive a * withholding payment covered by Subdivision 12‑B, 12‑C or 12‑D, or an * alienated personal services payment to which Division 13 applies, from an entity; and
(b) wishes to have a prescribed matter relating to the individual's income tax or other liability referred to in paragraph 11‑1(b), (c), (ca), (da) or (db) taken into account by the entity in working out the * amount required to be withheld from the payment;
may give the entity a declaration about the matter in the * approved form.
When declarations under subsection (1) can't be given
(2) The individual cannot give a declaration under subsection (1) unless:
(a) a * TFN declaration is in effect between the individual and the entity, or a * voluntary agreement covers the payment; and
(b) if the individual has given another entity a declaration on a prescribed matter--that declaration is not in effect.
Declarations changing information given in TFN declaration
(3) If:
(a) an individual has given a * TFN declaration to an entity; and
(b) the individual made a statement about a prescribed matter in the TFN declaration; and
(c) the individual's circumstances change in relation to the matter;
the individual may give the entity a declaration about the matter in the * approved form.
Regulations
(4) The regulations may prescribe:
(a) the matters about which a declaration under subsection (1) or (3) may be given; and
(b) when a declaration under subsection (1) or (3) starts or ceases to be in effect; and
(c) when a declaration under subsection (1) or (3) is taken to have been given.
(5) If:
(a) an individual gives an entity a declaration under subsection (1) or (3) about a matter; and
(b) the individual's circumstances change in relation to the matter;
the regulations may also prescribe when the individual must give the entity a new declaration about the matter.
Division 16 -- Payer's obligations and rights
Table of Subdivisions
Guide to Division 16
16‑A To withhold
16‑B To pay withheld amounts to the Commissioner
16‑BA To be registered
16‑C To provide information
16‑D Additional rights and obligations of entity that makes a payment
16‑1 What this Division is about
This Division sets out the obligations and rights of an entity required to withhold an amount under Division 12, or to pay an amount to the Commissioner under Division 13 or 14.
Note: The entity may also have obligations under other legislation. See, for example, the obligation to keep records under section 262A of the Income Tax Assessment Act 1936 .
Subdivision 16‑A -- To withhold
Table of sections
When to withhold
16‑5 When to withhold an amount
16‑20 Payer discharged from liability to recipient for amount withheld
Penalties for not withholding
16‑25 Failure to withhold: offence
16‑30 Failure to withhold: administrative penalty for entity other than exempt Australian government agency
16‑35 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment other than dividend, interest or royalty
16‑40 Failure to withhold: administrative penalty for exempt Australian government agency in relation to dividend, interest or royalty payment
16‑43 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment to foreign resident etc.
16‑5 When to withhold an amount
If Division 12 requires an entity to withhold an amount from a payment, the entity must do so when making the payment.
Note 1: An entity is required to withhold an amount under section 12‑145 when an investor becomes presently entitled to income of a unit trust.
Note 2: If section 12‑215, 12‑250 or 12-285, or subsection 12‑390(4), requires an entity to withhold an amount from a payment received by the entity, the entity must do so at the time required by that provision.
16‑20 Payer discharged from liability to recipient for amount withheld
An entity that:
(a) withholds an amount as required by Division 12; or
(b) pays to the Commissioner an amount as required by Division 13 or 14;
is discharged from all liability to pay or account for that amount to any entity except the Commissioner.
Note: The entity may be required to refund the amount in some circumstances. See Subdivision 18‑B.
16‑25 Failure to withhold: offence
(1) An entity must not fail to withhold an amount as required by Division 12.
Penalty: 10 penalty units.
Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Note 2: See sections 16‑30, 16‑35, 16‑40 and 16‑43 for an alternative administrative penalty.
(2) An entity must not fail to pay to the Commissioner an amount as required by Division 13 or 14.
Penalty: 10 penalty units.
Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Note 2: See sections 16‑30, 16‑35, 16‑40 and 16‑43 for an alternative administrative penalty.
(3) An offence against subsection (1) or (2) is a strict liability offence.
Note: For strict liability , see section 6.1 of the Criminal Code .
(4) If a person is convicted of an offence in relation to:
(a) a failure by that person or someone else to withhold an amount as required by Division 12; or
(b) a failure by that person or someone else to pay to the Commissioner an amount as required by Division 13 or 14;
the court may order the convicted person to pay to the Commissioner an amount up to the * amount required to be withheld. The court may so order in addition to imposing a penalty on the convicted person.
16‑30 Failure to withhold: administrative penalty for entity other than exempt Australian government agency
An entity (except an * exempt Australian government agency) that:
(a) fails to withhold an amount as required by Division 12; or
(b) fails to pay an amount to the Commissioner as required by Division 13 or 14;
is liable to pay to the Commissioner a penalty equal to that amount.
Note 1: An entity may become liable under this section in respect of a payment it made or received that is taken to have been subject to withholding tax as a result of a Commissioner's determination under subsection 177F(2A) of the Income Tax Assessment Act 1936 (see also subsection 177F(2F) of that Act).
Note 2: Division 298 in this Schedule contains machinery provisions for administrative penalties.
16‑35 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment other than dividend, interest or royalty
(1) An * exempt Australian government agency that:
(a) fails to withhold an amount as required by Division 12; or
(b) fails to pay to the Commissioner an amount as required by Division 14;
is liable to pay to the Commissioner a penalty of 20 penalty units.
Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Note 2: Division 298 in this Schedule contains machinery provisions for administrative and civil penalties.
Exception
(4) This section does not apply in relation to an * amount required to be withheld from a * withholding payment covered by Subdivision 12‑F (about dividend, interest or royalty payment) or by Subdivision 12‑FB (about payments to foreign residents).
16‑40 Failure to withhold: administrative penalty for exempt Australian government agency in relation to dividend, interest or royalty payment
An * exempt Australian government agency that:
(a) fails to withhold an amount as required by Division 12 from a * withholding payment covered by Subdivision 12‑F (about dividend, interest or royalty payment); or
(b) fails to pay to the Commissioner an amount as required by Division 14 in respect of a withholding payment covered by that Subdivision;
is liable to pay to the Commissioner a penalty equal to that amount.
Note 1: An exempt Australian government agency may become liable under this section in respect of a payment it made or received that is taken to have been subject to withholding tax as a result of a Commissioner's determination under subsection 177F(2A) of the Income Tax Assessment Act 1936 (see also subsection 177F(2F) of that Act).
Note 2: Division 298 in this Schedule contains machinery provisions for administrative penalties.
16‑43 Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment to foreign resident etc.
An * exempt Australian government agency that:
(a) fails to withhold an amount as required by Division 12 from a * withholding payment covered by Subdivision 12‑FB (about payments to foreign residents); or
(b) fails to pay to the Commissioner an amount as required by Division 14 in respect of a withholding payment covered by that Subdivision;
is liable to pay to the Commissioner a penalty equal to that amount.
Note: Division 298 in this Schedule contains machinery provisions for administrative penalties.
Subdivision 16‑B -- To pay withheld amounts to the Commissioner
Table of sections
When and how to pay amounts to the Commissioner
16‑70 Entity to pay amounts to Commissioner
16‑75 When amounts must be paid to Commissioner
16‑80 Penalty for failure to pay within time
16‑85 How amounts are to be paid
Who is a large, medium or small withholder
16‑95 Meaning of large withholder
16‑100 Meaning of medium withholder
16‑105 Meaning of small withholder
16‑110 Commissioner may vary withholder's status downwards
16‑115 Commissioner may vary withholder's status upwards
When and how to pay amounts to the Commissioner
16‑70 Entity to pay amounts to Commissioner
(1) An entity that withholds an amount under Division 12 must pay the amount to the Commissioner in accordance with this Subdivision.
(2) An entity that must pay an amount to the Commissioner under Division 13 or Subdivision 14‑A must do so in accordance with section 16‑85.
(3) An entity that must pay an amount to the Commissioner under Subdivision 14‑B must do so in accordance with sections 16‑80 and 16‑85.
Note: For provisions about collection and recovery of amounts payable to the Commissioner under this Part, see Part 4‑15.
16‑75 When amounts must be paid to Commissioner
Large withholder
(1) A * large withholder must pay to the Commissioner as shown in the table an amount it withholds under Division 12 during a month.
|
Payments by large withholders |
||
|
Item |
If the amount is withheld on this day of week: |
It must be paid to the Commissioner on or before: |
|
1 |
Saturday or Sunday |
The second Monday after that day |
|
2 |
Monday or Tuesday |
The first Monday after that day |
|
3 |
Wednesday |
The second Thursday after that day |
|
4 |
Thursday or Friday |
The first Thursday after that day |
Medium withholders
(2) Subject to subsection (2A), a * medium withholder must pay to the Commissioner an amount that it withholds during a month under Division 12 by the end of the 21st day of the next month.
(2A) If a * medium withholder:
(a) withholds an amount during a month under Division 12; and
(b) is a * deferred BAS payer on the 21st day of the month (the next month ) following that month;
the medium withholder must pay that amount to the Commissioner by the end of the 28th day of:
(c) the next month unless the amount is withheld during December; or
(d) the next February if the amount is withheld during December.
Small withholders
(3) Subject to subsection (4), if a * small withholder withholds an amount under Division 12 during a month in a * quarter, it must pay the amount to the Commissioner by the end of the 21st day of the month after the end of that quarter.
(4) If a * small withholder:
(a) withholds an amount under Division 12 during a month in a * quarter; and
(b) is a * deferred BAS payer on the 21st day of the month after the end of that quarter;
the small withholder must pay that amount to the Commissioner as shown in the table:
|
Payments by * deferred BAS payers |
||
|
Item |
If the amount is withheld during the * quarter ending on: |
the amount must be paid to the Commissioner by the end of: |
|
1 |
30 September |
the following 28 October |
|
2 |
31 December |
the following 28 February |
|
3 |
31 March |
the following 28 April |
|
4 |
30 June |
the following 28 July |
16‑80 Penalty for failure to pay within time
If an amount that an entity must pay to the Commissioner under subsection 16‑70(1) or (3) remains unpaid after the time by which it is due to be paid, the entity is liable to pay * general interest charge on the unpaid amount for each day in the period that:
(a) started at the beginning of the day by which the unpaid amount was due to be paid; and
(b) finishes at the end of the last day, at the end of which, any of the following remains unpaid:
(i) the unpaid amount;
(ii) general interest charge on any of the unpaid amount.
16‑85 How amounts are to be paid
Large withholder
(1) A * large withholder must pay to the Commissioner by a means of * electronic payment:
(a) an amount that it withholds under Division 12; and
(b) an amount that it pays to the Commissioner under Division 13 or 14.
Note 1: A different rule applies for some large withholders for July and August 2000. See section 16‑130.
Note 2: A penalty applies if a large withholder fails to pay electronically as required--see section 288‑20.
Note 3: A large withholder must also pay other tax debts electronically--see section 8AAZMA.
Medium or small withholder
(2) A * medium withholder or * small withholder must pay to the Commissioner:
(a) any amount that it withholds under Division 12; and
(b) any amount that it pays to the Commissioner under Division 13 or 14;
by a means of * electronic payment, or any other means approved in writing by the Commissioner.
Commissioner may vary payment method
(3) The Commissioner may, with an entity's agreement, vary the means by which the withholder pays amounts to the Commissioner under this Subdivision. The variation must be by written notice given to the entity.
Who is a large, medium or small withholder
16‑95 Meaning of large withholder
(1) An entity is a large withholder for a particular month (the current month ) in a * financial year starting on or after 1 July 2001 if:
(a) it was a * large withholder for June 2001; or
(b) the * amounts withheld by the entity during a financial year ending at least 2 months before the current month exceeded $1 million; or
(c) both of the following apply:
(i) at the end of a financial year (the threshold year ) ending at least 2 months before the current month, the entity was one of a number of companies that were at that time all members of the same * wholly‑owned group;
(ii) the amounts withheld by those companies during the threshold year exceeded $1 million; or
(d) the Commissioner determines under section 16‑115 that the entity is a large withholder for the current month.
Note: Different rules apply for working out who is a large withholder for a month in 2000‑01. See section 16‑125.
Exception
(2) However, the entity is not a * large withholder if the Commissioner determines under section 16‑110 that it is a * medium withholder or a * small withholder for the current month.
16‑100 Meaning of medium withholder
(1) An entity is a medium withholder for a particular month (the current month ) in a * financial year starting on or after 1 July 2001 if it is not a * large withholder for that month and:
(a) it was a * medium withholder for June 2001; or
(b) the * amounts withheld by the entity during a financial year ending before the current month exceeded $25,000; or
(c) the Commissioner determines under section 16‑110 or 16‑115 that the entity is a medium withholder for the current month.
Note: Different rules apply for working out who is a large withholder for a month in 2000‑01. See section 16‑125.
(2) However, the entity is not a * medium withholder if the Commissioner determines under section 16‑110 or 16‑115 that the entity is a * large withholder or a * small withholder for the current month.
16‑105 Meaning of small withholder
An entity is a small withholder for a particular month if:
(a) there is at least one * amount withheld by the entity during that month; and
(b) the entity is neither a * large withholder nor a * medium withholder for that month.
16‑110 Commissioner may vary withholder's status downwards
(1) The Commissioner may, by giving written notice to a * withholder:
(a) make the following determinations:
(i) a determination that a * large withholder is a * medium withholder or a * small withholder;
(ii) a determination that a medium withholder is a small withholder; or
(b) revoke or vary any such determination.
(2) The notice must state that the determination applies:
(a) for specified months; or
(b) for all months from and including a specified month.
(3) The determination has no effect for a particular month unless the notice is given before that month.
(4) An entity that would otherwise be a * large withholder or a * medium withholder for a particular month may apply in writing to the Commissioner for a determination under this section.
Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC.
16‑115 Commissioner may vary withholder's status upwards
(1) The Commissioner may, by giving written notice to a * withholder:
(a) make the following determinations:
(i) a determination that a * small withholder is a * medium withholder or a * large withholder;
(ii) a determination that a medium withholder is a large withholder; or
(b) revoke or vary any such determination.
(2) The notice must state that the determination applies:
(a) for specified months; or
(b) for all months from and including a specified month.
(3) A determination that a * small withholder is a * medium withholder has no effect for a particular month unless the notice is given before that month.
(4) Any other determination under this section has no effect for a month that is earlier than the second month after the month in which the notice is given.
(5) The Commissioner may, in making a determination under this section, have regard to the following:
(a) the sum of the amounts that the Commissioner considers to be likely to be the * amounts required to be withheld by the entity in the following 12 months;
(b) the extent (if any) to which the entity makes or receives * withholding payments that were previously made or received by another entity;
(c) any failure by the entity to comply with its obligations under this Part;
(d) any * arrangement that was entered into or carried out for the purpose of lengthening the intervals at which the entity is required to pay to the Commissioner amounts withheld from withholding payments;
(e) such other matters as the Commissioner considers relevant.
Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC.
Subdivision 16‑BA -- To be registered
Table of sections
Registration of withholders
16‑140 Withholders must be registered
16‑141 Registration and cancellation
Branch registration
16‑142 Branches may be registered
16‑143 Separate amounts for entities and branches
16‑144 Cancellation of branch registration
16‑145 Effect on branches of cancelling the entity's registration
16‑140 Withholders must be registered
(1) An entity that must pay an amount to the Commissioner under:
(a) subsection 16‑70(1) (about amounts withheld under Division 12); or
(aa) Division 13 (about payments in respect of alienated personal services payments); or
(b) Division 14 (about payments in respect of non‑cash benefits);
must apply to register with the Commissioner.
(2) The entity must apply in the * approved form by the day on which the entity is first required:
(a) to withhold an amount under Division 12; or
(b) to pay an amount to the Commissioner under Division 13 or 14.
However, the Commissioner may allow a longer period for applying.
(3) An entity that contravenes this section is liable to an administrative penalty of 5 penalty units.
Note 1: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
Note 2: Division 298 contains machinery provisions for administrative and civil penalties.
16‑141 Registration and cancellation
The Commissioner may register an entity or cancel the registration of an entity at any time.
16‑142 Branches may be registered
(1) The Commissioner may register a branch of a registered entity if:
(a) the entity applies, in the * approved form, for registration of the branch; and
(b) the entity has an * ABN or has applied for one; and
(c) the Commissioner is satisfied that the branch maintains an independent system of accounting, and can be separately identified by reference to:
(i) the nature of the activities carried on through the branch; or
(ii) the location of the branch; and
(d) the Commissioner is satisfied that the entity is * carrying on an enterprise through the branch, or intends to carry on an enterprise through the branch, from a particular date specified in the application.
A branch that is so registered is a PAYG withholding branch .
Note: A branch may be both a PAYG withholding branch under this Subdivision and a GST branch under the GST Act.
(2) The Commissioner may register a branch of a * government entity or a * non‑profit sub‑entity if:
(a) the branch or sub‑entity applies, in the * approved form, for registration; and
(b) the branch or sub‑entity has an * ABN or has applied for one.
A branch or sub‑entity that is so registered is also a PAYG withholding branch .
16‑143 Separate amounts for entities and branches
(1) If an entity has a * PAYG withholding branch, this Part applies to the entity as if the amounts that it must pay to the Commissioner under this Part were separated into the following classes:
(a) for each such branch of the entity, a class of amounts that relate to the branch; and
(b) a class of amounts that do not relate to any of the entity's branches.
Note: This section does not impose any legal obligations on the branches. The entity remains legally responsible under this Part for all amounts that relate to its branches.
(2) Those amounts are worked out as if the branch were a separate entity and as if:
(a) all payments made through the branch, from which amounts are required to be withheld under Division 12, were made by that separate entity; and
(aa) all * alienated personal services payments received through the branch, in respect of which Division 13 requires an amount to be paid to the Commissioner, were received by that separate entity; and
(b) all non‑cash benefits provided through the branch, in respect of which Division 14 requires an amount to be paid to the Commissioner, were provided by that separate entity.
16‑144 Cancellation of branch registration
The Commissioner must cancel the registration of a * PAYG withholding branch of an entity if the Commissioner is satisfied that the branch does not satisfy paragraph 16‑142(c) or (d).
16‑145 Effect on branches of cancelling the entity's registration
If an entity's registration is cancelled, the registration of any * PAYG withholding branches of the entity ceases to have effect.
Subdivision 16‑C -- To provide information
Table of sections
To the Commissioner
16‑150 Commissioner must be notified of amounts
16‑153 Annual reports
To recipients of withholding payments
16‑155 Annual payment summary
16‑157 Payment summary for Subdivision 12‑H
16‑160 Part‑year payment summary
16‑165 Payment summaries for superannuation lump sums and employment termination payments
16‑166 Payment summary for a departing Australia superannuation payment
16‑167 Payment summary for payment to recipient who does not quote ABN
16‑170 Form and content of payment summary
16‑175 Penalty for not providing payment summary
16‑180 Commissioner may exempt entity from giving payment summary
16‑182 Definition of reportable employer superannuation contribution
16‑150 Commissioner must be notified of amounts
(1) An entity that must pay an amount (even if it is a nil amount) to the Commissioner under:
(a) subsection 16‑70(1) (about amounts withheld under Division 12); or
(aa) Division 13 (about payments in respect of alienated personal services payments); or
(b) Division 14 (about payments in respect of non‑cash benefits);
must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid). The notification must be in the * approved form and lodged with the Commissioner.
(1) An entity must give a report to the Commissioner in the * approved form, not later than 31 October after the end of a * financial year, if during the financial year:
(a) the entity made any payment from which an amount was required to be withheld under section 12‑190, Subdivision 12‑F (other than section 12‑215, 12‑250 or 12‑285), Subdivision 12‑FA, section 12‑315 or Subdivision 12‑G; or
(b) the entity provided any * non‑cash benefit in respect of which an amount was required to be paid to the Commissioner under Division 14 because of the application of that Division in relation to section 12‑190, Subdivision 12‑F (other than section 12‑215, 12‑250 or 12‑285), Subdivision 12‑FA, section 12‑315 or Subdivision 12‑G; or
(c) the entity received any payment from which an amount was required to be withheld under section 12‑215, 12‑250, 12‑285 or 12‑317; or
(d) the entity received any non‑cash benefit in respect of which an amount was required to be paid to the Commissioner under Division 14 because of the application of that Division in relation to section 12‑215, 12‑250, 12‑285 or 12‑317.
(2) An entity must give a report to the Commissioner in the form required by subsection (3), not later than 14 August after the end of a * financial year, if during the financial year:
(a) the entity made any payment from which an amount was required to be withheld under Subdivision 12‑B, 12‑C or 12‑D; or
(aa) the entity received any * alienated personal services payment in respect of which an amount was required to be paid to the Commissioner under Division 13; or
(b) the entity provided any * non‑cash benefit in respect of which an amount was required to be paid to the Commissioner under Division 14 because of the application of that Division in relation to Subdivision 12‑B, 12‑C or 12‑D; or
(c) any person has a * reportable fringe benefit amount for the income year ending at the end of the financial year in respect of the person's employment by the entity; or
(d) the entity made * reportable employer superannuation contributions in respect of a person's employment.
(3) The report under subsection (2) must be either:
(a) a report in the * approved form; or
(b) a report consisting of:
(i) copies of all the summaries that the entity gave in relation to the * financial year under section 16‑155 in respect of payments, * non‑cash benefits, * alienated personal services payments, * reportable fringe‑benefit amounts and * reportable employer superannuation contributions covered by subsection (2) of this section; and
(ii) an accompanying statement in the approved form.
(4) An entity must give a report to the Commissioner in the * approved form if the entity is required to withhold amounts under Subdivision 12‑H in relation to * fund payments made by a particular * managed investment trust (the paying trust ) in relation to an income year of that trust.
Note: The entity may be the managed investment trust itself or a custodian or other entity.
(4A) The report under subsection (4) must be given:
(a) not later than 14 days after the end of 6 months after the end of the income year of the * managed investment trust in relation to which the relevant * fund payments were made; or
(b) within a longer period allowed by the Commissioner.
(5) In applying this section:
(a) a requirement to pay a nil amount to the Commissioner is to be treated as a requirement to pay an amount to the Commissioner; and
(b) a requirement to withhold a nil amount is to be treated as a requirement to withhold an amount.
(6) The Commissioner may, to meet the special circumstances of a particular case or class of cases, vary the requirements of this section.
(7) A variation must be made by a written notice:
(a) if it applies to a particular entity-- that is given to that entity; or
(b) if it applies to a class of entities--that is given to each of the entities, or a copy of which is published in the Gazette .
To recipients of withholding payments
(1) Within 14 days after the end of a * financial year, an entity (the payer ) must give a * payment summary (and a copy of it) to another entity (the recipient ) if:
(a) during the year the payer made one or more * withholding payments (other than withholding payments covered by section 12‑85, 12‑190, 12‑215, 12‑250, 12‑285, 12‑317, 12‑385 or 12‑390) to the recipient; or
(b) during the year the payer received one or more withholding payments covered by section 12‑215, 12‑250 or 12‑285 and, in relation to each of them, the recipient is the foreign resident mentioned in the section; or
(baa) during the year the payer received one or more withholding payments covered by section 12‑317 and, in relation to each of them, the recipient is the likely foreign recipient mentioned in the section; or
(ba) during the year the payer received one or more withholding payments covered by Division 13 and, in relation to each of them, an amount is included in the recipient's assessable income under Division 86 of the Income Tax Assessment Act 1997 ; or
(bb) because of section 86‑40 of the Income Tax Assessment Act 1997 , the payer is taken to have paid salary to the recipient on the last day of the year; or
(c) the recipient is an individual and has a * reportable fringe benefits amount, for the income year ending at the end of that financial year, in respect of his or her employment (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ) by the payer; or
(d) the recipient is an individual and * reportable employer superannuation contributions have been made by the payer, in respect of the individual's employment, during the year.
(2) The * payment summary must cover:
(a) if paragraph (1)(a), (b) or (ba) applies--each of the * withholding payments mentioned in that paragraph, except one covered by a previous payment summary (and a copy of it) given by the payer to the recipient under section 16‑160; and
(aa) if paragraph (1)(bb) applies--each of the withholding payments constituted by the salary mentioned in that paragraph, except one covered by a previous payment summary (and a copy of it) given by the payer to the recipient under section 16‑160; and
(b) if paragraph (1)(c) applies--the * reportable fringe benefits amount, except so much of it as is covered by a previous payment summary (and a copy of it) given by the payer to the recipient under this section; and
(c) if paragraph (1)(d) applies--the total of the * reportable employer superannuation contributions, except so much of those contributions as are covered by a previous payment summary given by the payer to the recipient under section 16‑160.
16‑157 Payment summary for Subdivision 12‑H
(1) An entity (the payer ) must give a * payment summary to another entity (the recipient ) if the payer made * withholding payments covered by section 12‑385 or 12‑390 to the recipient in relation to * fund payments made by a particular * managed investment trust (the paying trust ) in relation to an income year of that trust.
Note: The entity may be the managed investment trust itself or a custodian or other entity.
(2) The * payment summary:
(a) must cover each of the * withholding payments mentioned in subsection (1); and
(b) may be in electronic form; and
(c) must be given:
(i) not later than 14 days after the end of 6 months after the end of the income year of the * managed investment trust in relation to which the relevant * fund payments were made; or
(ii) within a longer period allowed by the Commissioner.
16‑160 Part‑year payment summary
(1) An entity (the payer ) must give a * payment summary (and a copy of it) to another entity (the recipient ) if, not later than 21 days before the end of a * financial year, the recipient asks in writing for a payment summary covering:
(a) one or more * withholding payments (other than withholding payments covered by section 12‑85, 12‑190, 12‑215, 12‑250, 12‑285, 12‑317, 12‑385 or 12‑390) that the payer made to the recipient during the year; or
(b) one or more withholding payments covered by section 12‑215, 12‑250 or 12‑285, or a part of each such payment, that the payer received during the year for the recipient, if the recipient is the foreign resident mentioned in the section; or
(ba) one or more withholding payments covered by section 12‑317, or a part of each such payment, that the payer received during the year for the recipient, if the recipient is the likely foreign recipient mentioned in that section; or
(c) one or more withholding payments covered by Division 13 that the payer received during the year and that are included in the recipient's assessable income for the income year under section 86‑15 of the Income Tax Assessment Act 1997 ; or
(d) * reportable employer superannuation contributions made by the payer, in respect of the recipient's employment, during the financial year;
other than a payment covered by a previous payment summary (and a copy of it) given under this section.
(2) The payer must comply with the request within 14 days after receiving it, unless the recipient is an individual and has a * reportable fringe benefits amount, for the income year ending at the end of that * financial year, in respect of his or her employment (within the meaning of the Fringe Benefits Tax Assessment Act 1986 ) by the payer.
16‑165 Payment summaries for superannuation lump sums and employment termination payments
(1) Within 14 days after an entity (the payer ) makes a payment covered under subsection (2) to a person (the recipient ), the entity must:
(a) give a * payment summary to the recipient that covers the payment (and no other payments); and
(b) give a copy of the summary to the Commissioner.
(2) The following payments are covered under this subsection if they are * withholding payments:
(a) a * superannuation lump sum;
(b) an * employment termination payment, other than a directed termination payment within the meaning of section 82‑10F of the Income Tax (Transitional Provisions) Act 1997 .
16‑166 Payment summary for a departing Australia superannuation payment
Within 14 days after an entity (the payer ) makes a * departing Australia superannuation payment, the payer must:
(a) give a * payment summary that covers the payment to the recipient of the payment; and
(b) give a copy of the summary to the Commissioner.
16‑167 Payment summary for payment to recipient who does not quote ABN
(1) An entity (the payer ) that makes a * withholding payment covered by section 12‑190 (about payments to recipients who do not quote their ABN) to another entity (the recipient ) must give the recipient a * payment summary (and a copy of it) that covers that payment, unless the * amount required to be withheld from the payment is nil.
(2) The summary must cover only that payment.
(3) The payer must give the summary to the recipient when making the payment, or as soon as practicable afterwards.
16‑170 Form and content of payment summary
(1) A payment summary (except one relating to Subdivision 12‑H) is a written statement that:
(a) names the payer and the recipient; and
(b) if the recipient has given the recipient's * tax file number or * ABN to the payer--states the tax file number or ABN; and
(c) states the total of the * withholding payments (if any) that it covers, and the total of the * amounts withheld by the payer from those withholding payments; and
(d) specifies the * financial year in which the withholding payments were made; and
(e) specifies the * reportable fringe benefits amount (if any) that it covers and the income year to which that amount relates; and
(f) specifies the * reportable employer superannuation contributions (if any) that it covers and the income year to which those contributions relate; and
(g) is in the * approved form.
(1AA) A payment summary relating to Subdivision 12‑H is a statement that:
(a) names the payer and the recipient; and
(b) if the recipient has given the recipient's * tax file number or * ABN to the payer--states the tax file number or ABN; and
(c) states the total of the * withholding payments (if any) that it covers, and the total of the * amounts withheld by the payer from those withholding payments; and
(d) specifies the income year of the relevant * managed investment trust to which it relates.
(1A) For any of the * withholding payments to which paragraph 16‑155(2)(aa) applies, paragraph (1)(d) is taken to refer to the * financial year preceding the financial year in which the withholding payments were received.
(2) The Commissioner may, in writing, require particular information to be included in a * payment summary or a class of payment summaries.
(3) A * payment summary may consist of 2 or more statements that each complies with subsection (1) and together cover what section 16‑155, 16‑160, 16‑165, 16‑166 or 16‑167 (as appropriate) requires the payment summary to cover.
(4) The Commissioner may vary any requirements under subsection (1), (2) or (3) by written notice given to an entity. The Commissioner may do so in such instances and to such extent as the Commissioner thinks fit.
16‑175 Penalty for not providing payment summary
(1) An entity must not fail to comply with any requirements under section 16‑155, 16‑157, 16‑160, 16‑165, 16‑166 or 16‑167, or subsection 16‑170(1), (1AA), (2) or (3) (including any requirements varied by the Commissioner under subsection 16‑170(4)).
Penalty: 20 penalty units.
Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
(2) An offence under subsection (1) is an offence of strict liability.
Note: For strict liability , see section 6.1 of the Criminal Code .
16‑180 Commissioner may exempt entity from giving payment summary
(1) The Commissioner may, having regard to the circumstances of a particular case or class of cases, exempt an entity from specified requirements of any of sections 16‑155 to 16‑167. If the Commissioner does so, the exemption has effect accordingly.
(2) An exemption must be made by a written notice:
(a) if it applies to a particular entity--that is given to that entity; or
(b) if it applies to a class of entities--that is given to each of the entities, or a copy of which is published in the Gazette .
16‑182 Definition of reportable employer superannuation contribution
(1) A reportable employer superannuation contribution , for an individual for an income year, is an amount contributed:
(a) by an employer of the individual, or an * associate of the employer, for the individual's benefit in respect of the income year; and
(b) to a * superannuation fund or an * RSA;
to the extent that either or both of the following paragraphs apply:
(c) the individual has or has had, or might reasonably be expected to have or have had, the capacity to influence the size of the amount;
(d) the individual has or has had, or might reasonably be expected to have or have had, the capacity to influence the way the amount is contributed so that his or her assessable income is reduced.
(2) However, an amount is not a reportable employer superannuation contribution to the extent that it is included in the individual's assessable income for the income year.
(3) For the purposes of this section, employer has the expanded meaning given by section 12 of the Superannuation Guarantee (Administration) Act 1992 (assuming that subsection 12(11) of that Act had not been enacted).
(4) For the purposes of this section, disregard whether any * superannuation benefits arising from a contribution are payable to a * SIS dependant of the individual if the individual dies before or after becoming entitled to receive the benefits.
Subdivision 16‑D -- Additional rights and obligations of entity that makes a payment
Table of sections
16‑195 Payer's right to recover amounts of penalty: certain withholding taxes
16‑195 Payer's right to recover amounts of penalty: certain withholding taxes
(1) An entity that has paid an amount of penalty under section 16‑30, 16‑35 or 16‑40 for a * withholding payment covered by:
(a) Subdivision 12‑F (about a dividend, interest or royalty payment); or
(aa) section 12‑305 (about a departing Australia superannuation payment); or
(b) section 12‑320 (about a mining payment); or
(c) Subdivision 12‑H (about distributions of managed investment trust income);
may recover an amount equal to the amount of penalty from the person liable to pay the * withholding tax, or * mining withholding tax, for the withholding payment.
Note Sections 16‑30, 16‑35 and 16‑40 provide for an administrative penalty for failing to comply with Division 12 or 14.
(2) Subsection (3) applies if an entity has paid an amount of penalty under section 12‑415 to the Commissioner for a failure to give a notice, or to make details available on a website, as required by section 12‑395 in relation to an amount (the relevant amount ).
(3) The entity may recover from another entity that is liable to pay * managed investment trust withholding tax in relation to an amount attributable to the relevant amount the lesser of:
(a) an amount equal to the amount of that tax that the other entity is liable to pay; and
(b) the amount of the penalty.
Division 18 -- Recipient's entitlements and obligations
Table of Subdivisions
18‑A Crediting withheld amounts against liability for income tax, withholding tax or mining withholding tax
18‑B Refund of certain withheld amounts
18‑C Recipient's obligations
Subdivision 18‑A -- Crediting withheld amounts against liability for income tax, withholding tax or mining withholding tax
18‑1 What this Subdivision is about
In general, an entity:
• that receives a withholding payment (except one covered by section 12‑215, 12‑250 or 12‑285, or subsection 12‑390(4)); or
• that is the foreign resident for which a withholding payment covered by section 12‑215, 12‑250 or 12‑285, or subsection 12‑390(4), (or a part of it) is received;
is entitled to a credit for the amount withheld from the withholding payment.
However, if that entity is a partnership or trust, a partner, beneficiary or trustee may be entitled to the credit.
This Subdivision tells you:
• who is entitled to a credit; and
• how to work out the amount of the credit.
How a credit is applied is set out in Division 3 of Part IIB.
Table of sections
General exception
18‑5 No credit for refunded amount
Entitlement to credits: income tax liability
18‑10 Application of sections 18‑ 15, 18‑20 and 18‑25
18‑ 15 Tax credit for recipient of withholding payments
18‑20 Tax credit where recipient is a partnership
18‑25 Tax credit where recipient is a trust
18‑27 Tax credit for alienated personal services payments
Entitlement to credits: dividend, interest or royalty or amount attributable to fund payment
18‑30 Credit: dividend, interest or royalty
18‑32 Credit: amount attributable to fund payment
18‑35 Credit: penalty under section 12‑415, 16‑30 or 16‑40 or related general interest charge
18‑40 Credit: liability under Part 4‑25
Entitlement to credit: departing Australia superannuation payment
18‑42 Credit--departing Australia superannuation payment
Entitlement to credit: mining payment
18‑45 Credit--mining payment
Entitlement to credit: amount attributable to fund payment
18‑5 No credit for refunded amount
An entity is not entitled to a credit under this Subdivision for an * amount withheld from a * withholding payment to the extent that the amount must be refunded under Subdivision 18‑B.
Entitlement to credits: income tax liability
18‑10 Application of sections 18‑ 15, 18‑20 and 18‑25
(1) The rules set out in sections 18‑ 15, 18‑20 and 18‑25 do not apply to an * amount withheld from a * withholding payment that is covered by Subdivision 12‑F (about dividend, interest or royalties), Subdivision 12‑FA (about departing Australia superannuation payments), section 12‑320 (about mining payments), Subdivision 12‑H (about distributions of managed investment trust income) or Division 13 (about alienated personal services payments).
(2) If an entity withholds an amount from a * withholding payment as required by section 12‑317, apply sections 18‑ 15, 18‑20 and 18‑25 in relation to the payment as if the payment had been made to the likely foreign recipient mentioned in section 12‑317 (instead of to the intermediary mentioned in that section).
18‑15 Tax credit for recipient of withholding payments
(1) An entity is entitled to a credit equal to the total of the * amounts withheld from * withholding payments made to the entity during an income year if an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the entity for the income year.
(2) To the extent that the entitlement to a credit is in respect of an * amount withheld from a * withholding payment to which paragraph 16‑155(2)(aa) applies, the entitlement is treated as arising for the income year preceding the income year in which the withholding payment is made.
18‑20 Tax credit where recipient is a partnership
(1) An entity is entitled to a credit in respect of * amounts withheld from * withholding payments made to a partnership during an income year if:
(a) the entity has an individual interest in the net income or partnership loss of the partnership for that income year that is wholly or partly attributable to those withholding payments; and
(b) the * income tax return of the partnership for the income year has been lodged with the Commissioner; and
(c) an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the entity for the income year.
(2) The amount of the credit is worked out using the formula:
where:
"amounts withheld" means the sum of the * amounts withheld from the * withholding payments.
"individual interest" means so much of the individual interest of the partner as is attributable to the * withholding payments.
"net income/partnership loss" means so much of the net income or partnership loss for that income year as is attributable to the * withholding payments.
18‑25 Tax credit where recipient is a trust
(1) An entity is entitled under subsection (2), (4), (6) or (8) to a credit in respect of * amounts withheld (the amounts withheld ) from * withholding payments made to the trustee of a trust during an income year.
Trust--section 97
(2) A beneficiary of the trust is entitled to a credit if:
(a) an amount is included in the assessable income of the beneficiary under section 97 of the Income Tax Assessment Act 1936 in respect of a share of the net income of the trust; and
(b) the share is wholly or partly attributable to the * withholding payments; and
(c) an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the beneficiary for the income year.
(3) The amount of the credit is worked out using the formula:
where:
"net income" means so much of the net income as is attributable to the * withholding payments.
"share of net income" means so much of that share of the net income as is attributable to the * withholding payments.
Trust--section 98
(4) The trustee of the trust is entitled to a credit if:
(a) under section 98 of the Income Tax Assessment Act 1936 the trustee is liable to be assessed, and to pay income tax, on an amount in respect of a share of the net income of the trust to which a beneficiary is presently entitled; and
(b) the share is wholly or partly attributable to the * withholding payments; and
(c) an assessment has been made of that income tax or an assessment has been made that no income tax is payable.
(5) The amount of the credit is worked out using the formula:
where:
"net income" means so much of the net income as is attributable to the * withholding payments.
"share of net income" means so much of that share of the net income as is attributable to the * withholding payments.
Trust--section 99 or 99A
(6) The trustee of the trust is entitled to a credit under this subsection if:
(a) under section 99 or 99A of the Income Tax Assessment Act 1936 , the trustee is liable to be assessed, and to pay income tax, on the net income of the trust, or on part of it; and
(b) the net income or that part of it is wholly or partly attributable to the * withholding payments; and
(c) an assessment has been made of that income tax or an assessment has been made that no income tax is payable.
(7) The amount of the credit is worked out using the formula:
where:
"net income" means so much of the net income as is attributable to the * withholding payments.
"part of net income" means so much of the net income, or of that part of it, as is attributable to the * withholding payments.
Trust--no net income
(8) If there is no net income of the trust for the income year, the trustee is entitled to a credit equal to the sum of the * amounts withheld from the * withholding payments.
18‑27 Tax credit for alienated personal services payments
An entity is entitled to a credit equal to the total of the amounts paid under Division 13 in respect of amounts included in the entity's assessable income for an income year under section 86‑15 of the Income Tax Assessment Act 1997 if an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the entity for the income year.
Entitlement to credits: dividend, interest or royalty or amount attributable to fund payment
18‑30 Credit: dividend, interest or royalty
(1) An entity is entitled to a credit if:
(a) the entity's * ordinary income or * statutory income includes a * dividend (or a part of it), interest (within the meaning of Division 11A of Part III of the Income Tax Assessment Act 1936 ) or a * royalty; and
(b) the entity has borne all or part of an * amount withheld from the dividend, interest or royalty.
(2) The amount of the credit is that amount or part.
Note: A taxpayer may also be entitled to a credit in relation to payment of interest under, or in relation to the transfer of, a qualifying security. See section 128NBA of the Income Tax Assessment Act 1936 .
18‑32 Credit: amount attributable to fund payment
(1) An entity is entitled to a credit if:
(a) the entity's * ordinary income or * statutory income includes an amount that is represented by or reasonably attributable to a * fund payment; and
(b) the entity has borne all or part of an * amount withheld from the payment under Subdivision 12‑H.
(2) The amount of the credit is that amount or part.
18‑35 Credit: penalty under section 12‑415, 16‑30 or 16‑40 or related general interest charge
(1) If an entity has paid:
(a) an amount of penalty under section 16‑30 or 16‑40 to the Commissioner for a * withholding payment covered by Subdivision 12‑F or 12‑H; or
(b) an amount of * general interest charge under section 298‑25 for the penalty;
the entity liable to pay the * withholding tax for the withholding payment is entitled to a credit equal to the amount of penalty, or general interest charge, as appropriate.
(1A) If an entity has paid:
(a) an amount of penalty under section 12‑415 to the Commissioner for a failure to give a notice, or to make details available on a website, as required by section 12‑395; or
(b) an amount of * general interest charge under section 298‑25 for the penalty;
the entity liable to pay the * managed investment trust withholding tax in relation to the amount (the relevant amount ) giving rise to the penalty is entitled to a credit equal to the lesser of:
(d) the amount of penalty, or general interest charge, as appropriate; and
(e) the amount of managed investment trust withholding tax (and any general interest charge under section 840‑ 810 of the Income Tax Assessment Act 1997 ) in relation to the relevant amount.
Remission
(2) If:
(a) an entity has paid to the Commissioner an amount of penalty mentioned in paragraph (1)(a) or (1A)(a); and
(b) the Commissioner remits the whole or a part of the amount of the penalty under section 298‑20;
then:
(c) any credit under subsection (1) or (1A) relating to the amount paid to the Commissioner is reduced by the amount that is remitted; and
(d) the Commissioner must pay to the entity an amount equal to the amount that is remitted.
(3) If:
(a) an entity has paid to the Commissioner an amount of * general interest charge mentioned in paragraph (1)(b) or (1A)(b); and
(b) the Commissioner remits the whole or a part of the amount of the charge under section 8AAG;
then:
(c) any credit under subsection (1) or (1A) relating to the amount is reduced by the amount that is remitted; and
(d) the Commissioner must pay to the entity an amount equal to the amount that is remitted.
18‑40 Credit: liability under Part 4‑25
(1) If an entity has paid to the Commissioner:
(a) an amount of penalty under Subdivision 284‑C in relation to a * scheme to which section 177CA of the Income Tax Assessment Act 1936 applies for a * withholding payment; or
(b) an amount of * general interest charge under section 298‑25 in relation to that amount;
the entity liable to pay the * withholding tax for that withholding payment is entitled to a credit equal to the amount paid by the entity.
Remission
(2) If:
(a) an entity has paid an amount under Subdivision 284‑C in relation to a penalty mentioned in paragraph (1)(a); and
(b) the Commissioner remits the whole or a part of the amount of the penalty under section 298‑20;
then:
(c) any credit under subsection (1) relating to the amount paid by the entity is reduced by the amount that is remitted; and
(d) the Commissioner must pay to the entity an amount equal to the amount that is remitted.
(3) If:
(a) an entity has paid to the Commissioner an amount of * general interest charge mentioned in paragraph (1)(b); and
(b) the Commissioner remits the whole or a part of the amount of the charge under section 8AAG;
then:
(c) any credit under subsection (1) relating to the amount is reduced by the amount that is remitted; and
(d) the Commissioner must pay to the entity an amount equal to the amount that is remitted.
Entitlement to credit: departing Australia superannuation payment
18‑42 Credit--departing Australia superannuation payment
Credit--amount withheld
(1) If there is an * amount withheld from a * withholding payment that is covered by section 12‑305 (departing Australia superannuation payment), the entity liable to pay * withholding tax under section 301‑ 175 of the Income Tax Assessment Act 1997 on the payment is entitled to a credit of an amount equal to the amount withheld.
Credit--penalty amount
(2) If an entity has paid to the Commissioner a penalty amount under section 16‑30 or 16‑35 in relation to an * amount required to be withheld under section 12‑305 (departing Australia superannuation payment), the entity mentioned in subsection (1) is entitled to a credit equal to the penalty amount.
Remission
(3) If the Commissioner remits the whole or a part of the amount of penalty under section 298‑20 that has been paid to the Commissioner by the entity:
(a) any credit that relates to the amount is reduced by the amount that is remitted; and
(b) the Commissioner must pay to the entity an amount equal to the amount that is remitted.
Entitlement to credit: mining payment
Credit--amount withheld
(1) If there is an * amount withheld from a * withholding payment that is covered by section 12‑320 (mining payment):
(a) if paragraph (b) does not apply-- the entity liable to pay * mining withholding tax under section 128V of the Income Tax Assessment Act 1936 on the payment is entitled to a credit of an amount equal to the amount withheld; or
(b) if, under subsection 128U(4) of that Act, separate mining payments are taken to have been made to, or applied for the benefit of, 2 or more entities because of that payment--each of those entities is entitled to a credit equal to the amount worked out using the formula:
Credit--penalty amount
(2) If an entity has paid to the Commissioner a penalty amount under section 16‑30 or 16‑35 in relation to an * amount required to be withheld under section 12‑320 (mining payment):
(a) if paragraph (1)(a) applies--the entity mentioned in that paragraph is entitled to a credit equal to the penalty amount; or
(b) if paragraph (1)(b) applies--each of the entities mentioned in that paragraph is entitled to a credit of an amount worked out using the formula:
Remission
(3) If the Commissioner remits the whole or a part of the amount of penalty under section 298‑20 that has been paid to the Commissioner by the entity:
(a) any credit that relates to the amount is reduced by the amount that is remitted; and
(b) the Commissioner must pay to the entity an amount equal to the amount that is remitted.
Entitlement to credit: amount attributable to fund payment
Subdivision 18‑B -- Refund of certain withheld amounts
Table of sections
18‑65 Refund of withheld amounts by the payer to the recipient
18‑70 Refund of withheld amounts by the Commissioner to the recipient
18‑80 Refund by Commissioner of amount withheld from payment in respect of investment
18‑65 Refund of withheld amounts by the payer to the recipient
(1) An entity (the payer ) must refund to another entity (the recipient ) an amount if:
(a) the payer:
(i) withheld the amount purportedly under Division 12 from a payment made to, or received for, the recipient (whether the amount has been paid to the Commissioner or not); or
(ia) paid the amount to the Commissioner purportedly under Division 13 for an * alienated personal services payment in relation to which an amount is included in the recipient's assessable income year under section 86‑15 of the Income Tax Assessment Act 1997 ; or
(ii) paid the amount to the Commissioner purportedly under Division 14 for a * non‑cash benefit provided to, or received for, the recipient; and
(b) the amount was so withheld, or paid to the Commissioner, in error; and
(c) either:
(i) the payer becomes aware of the error; or
(ii) the recipient applies to the payer for the refund;
before the end of 21 July in the financial year after the one in which the amount was so withheld or paid to the Commissioner; and
(d) any information requested by the payer under subsection (3) has been given to the payer, or the time for making the request (see subsection (4)) has passed without such a request being made.
(2) The amount that must be refunded under subsection (1) is a debt recoverable by the recipient from the payer.
Request for tax file number (or in some cases, ABN)
(3) The payer may request the recipient to give to the payer:
(a) in any case--the recipient's * tax file number; or
(b) in any case--evidence of the basis on which the recipient is taken to have quoted its tax file number to the payer; or
(c) if the payment or * non‑cash benefit was in respect of a * Part VA investment made by the recipient in the course or furtherance of an * enterprise carried on by it--the recipient's * ABN;
if:
(d) the payment, * alienated personal services payment or non‑cash benefit was in respect of any of the following provisions:
(i) Subdivision 12‑B (payments for work or services);
(ii) Subdivision 12‑C ( * superannuation benefits, annuities, * employment termination payments and unused leave payments);
(iii) Subdivision 12‑D (benefits and compensation payments);
(iv) section 12‑140 or 12‑145 (recipient does not quote tax file number or ABN); and
(e) when the application for the refund is made, or when the payer otherwise becomes aware of the error, the payer has a record of none of the following:
(i) the recipient's tax file number;
(ii) the basis on which the recipient is taken to have quoted the tax file number to the payer;
(iii) if paragraph (c) applies--the recipient's ABN.
When must the request be made
(4) The request must be made within 7 working days (of the payer) after the payer receives the application for the refund or after the payer otherwise becomes aware of the error (as appropriate).
Recovery of refunded amount
(5) If a payer refunds an amount under subsection (1), the payer may recover from the Commissioner as a debt due to the payer so much of the amount:
(a) which is withheld as mentioned in subparagraph (1)(a)(i) and paid to the Commissioner, or which is paid to the Commissioner as mentioned in subparagraph (1)(a)(ia) or (ii); and
(b) which the payer has not recorded as being offset under subsection (6).
Offsetting a refunded amount
(6) If:
(a) a payer refunds an amount (the refunded amount ) under subsection (1); and
(b) the amount withheld as mentioned in subparagraph (1)(a)(i) that the payer has paid to the Commissioner, or the amount paid to the Commissioner as mentioned in subparagraph (1)(a)(ia) or (ii), is equal to all or a part of the refunded amount; and
(c) apart from this subsection, the payer would be required to pay to the Commissioner another amount or amounts under Division 13 or 14 or subsection 16‑70(1) (the payment to the Commissioner ); and
(d) the payer records in writing that it offsets all or a part of the amount paid to the Commissioner (as mentioned in paragraph (b)) against the payment to the Commissioner;
the payment to the Commissioner is reduced by so much of the amount as the payer so recorded as being offset.
(7) The payer must not record that it offsets any part of an amount that:
(a) the payer has previously recorded under subsection (6); or
(b) the payer has sought to recover from the Commissioner under subsection (5).
18‑70 Refund of withheld amounts by the Commissioner to the recipient
(1) An entity (the recipient ) may apply in writing to the Commissioner for the refund of an amount if:
(a) another entity (the payer ):
(i) withheld an amount purportedly under Division 12 from a payment made to, or received for, the recipient; or
(ia) paid the amount to the Commissioner purportedly under Division 13 for an * alienated personal services payment in relation to which an amount is included in the recipient's assessable income year under section 86‑15 of the Income Tax Assessment Act 1997 ; or
(ii) paid to the Commissioner an amount purportedly under Division 14 for a * non‑cash benefit provided to, or received for, the recipient; and
(b) the amount was so withheld, or paid to the Commissioner, in error; and
(c) section 18‑65 does not apply because the payer did not become aware of the error, or the recipient did not apply for a refund, as mentioned in subsection 18‑65(1); and
(d) if subparagraph (a)(i) applies--the payer has already paid the withheld amount to the Commissioner.
(2) The Commissioner must refund the amount if the application sets out:
(a) if the recipient has a * tax file number--that tax file number; or
(b) if the recipient does not have a tax file number but was taken to have quoted a tax file number to the payer before the amount was withheld or paid to the Commissioner--the basis on which the recipient was taken to have quoted the tax file number; or
(c) if the payment or * non‑cash benefit was in respect of a * Part VA investment made by the recipient in the course or furtherance of an * enterprise carried on by it--the recipient's * ABN;
and the Commissioner is satisfied that it would be fair and reasonable to refund the amount, having regard to:
(d) the circumstances that gave rise to the withholding obligation (if any); and
(e) the nature of the error; and
(f) any other matter the Commissioner considers relevant.
Note: A person who is dissatisfied with a decision under this section may object against the decision in the manner set out in Part IVC.
18‑80 Refund by Commissioner of amount withheld from payment in respect of investment
The Commissioner must refund to an entity all or part of an * amo