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Taxation Administration Act 1953

  • - C2012C00234
  • In force - Superseded Version
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Act No. 1 of 1953 as amended, taking into account amendments up to Tax Laws Amendment (2011 Measures No. 7) Act 2011
An Act to provide for the administration of certain Acts relating to Taxation, and for purposes connected therewith
Administered by: Treasury
General Comments: This compilation is affected by a retrospective amendment, please see Tax Laws Amendment (2011 Measures No. 9) Act 2012 [Act No. 12 of 2012], for details.
Registered 17 Feb 2012
Start Date 01 Jan 2012
End Date 20 Mar 2012
Table of contents.

Taxation Administration Act 1953

Act No. 1 of 1953 as amended

This compilation was prepared on 1 January 2012
taking into account amendments up to Act No. 147 of 2011

Volume 2 includes      First and Second Schedules
                                    Schedule 1
                                    Note 1
                                    Table of Acts
                                    Act Notes
                                    Table of Amendments
                                    Notes 2–8
                                    Tables A and B

The text of any of those amendments not in force
on that date is appended in the Notes section

The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section

  

  

 


Contents

The Schedules                                                                                                                           1

First Schedule—Amendments of Acts                                                                       1

Second Schedule—Citation of Acts amended                                                       2

Schedule 1—Collection and recovery of income tax and other liabilities 3

Chapter 2—Collection, recovery and administration of income tax      3

Part 2‑1—Introduction to the Pay as you go (PAYG) system                3

Division 6—Guide to Parts 2‑5 and 2‑10                                                              3

6‑1......... What Parts 2‑5 and 2‑10 are about...................................................... 3

6‑5......... The Pay as you go (PAYG) system.................................................... 3

6‑10....... How the amounts collected are dealt with........................................... 4

Part 2‑5—Pay as you go (PAYG) withholding                                               5

Division 10—Guide to Part 2‑5                                                                               5

10‑1....... What this Part is about........................................................................ 5

10‑5....... Summary of withholding payments.................................................... 5

Division 11—Preliminary matters                                                                        8

11‑1....... Object of this Part............................................................................... 8

11‑5....... Constructive payment.......................................................................... 8

Division 12—Payments from which amounts must be withheld                     9

Subdivision 12‑A—General rules                                                                           9

12‑1....... General exceptions.............................................................................. 9

12‑5....... What to do if more than one provision requires a withholding.......... 10

12‑7....... Division does not apply to alienated personal services payments...... 12

12‑10..... Division does not apply to non‑cash benefits.................................... 13

12‑20..... Application of Division and regulations to non‑share dividends....... 13

Subdivision 12‑B—Payments for work and services                                      13

12‑35..... Payment to employee........................................................................ 13

12‑40..... Payment to company director............................................................ 14

12‑45..... Payment to office holder................................................................... 14

12‑47..... Payment to religious practitioners..................................................... 14

12‑50..... Return to work payment.................................................................... 15

12‑55..... Voluntary agreement to withhold...................................................... 15

12‑60..... Payment under labour hire arrangement, or specified by regulations 16

Subdivision 12‑C—Payments for retirement or because of termination of employment            17

12‑80..... Superannuation income streams and annuities.................................. 17

12‑85..... Superannuation lump sums and payments for termination of employment               17

12‑90..... Unused leave payments..................................................................... 17

Subdivision 12‑D—Benefit and compensation payments                               17

12‑110... Social Security or other benefit payment........................................... 18

12‑115... Commonwealth education or training payment................................. 18

12‑120... Compensation, sickness or accident payment.................................... 18

Subdivision 12‑E—Payments where TFN or ABN not quoted                      19

Payment in respect of investment                                                                         19

12‑140... Recipient does not quote tax file number........................................... 19

12‑145... Investor becoming presently entitled to income of a unit trust........... 20

12‑150... Limited application of section 12‑140 to payment under financial arrangement        21

12‑155... When investor may quote ABN as alternative................................... 22

12‑160... Investment body unaware that exemption from quoting TFN has stopped applying                22

12‑165... Exception for fully franked dividend................................................. 22

12‑170... Exception for payments below thresholds set by regulations............ 23

Payment of income of closely held trust where TFN not quoted                  23

12‑175... Trustee distributes income of closely held trust................................. 23

12‑180... Beneficiary becomes presently entitled to income of closely held trust 25

12‑185... Exception for payments below thresholds set by regulations............ 26

Payment for a supply                                                                                              26

12‑190... Recipient does not quote ABN.......................................................... 26

Subdivision 12‑F—Dividend, interest and royalty payments                        29

Dividends                                                                                                                    30

12‑210... Dividend payment to overseas person............................................... 30

12‑215... Dividend payment received for foreign resident................................ 30

12‑220... Application to part of a dividend....................................................... 31

12‑225... Application to distribution by a liquidator or other person................ 31

Interest                                                                                                                        31

12‑245... Interest payment to overseas person.................................................. 31

12‑250... Interest payment received for foreign resident................................... 32

12‑255... Interest payment derived by lender in carrying on business through overseas permanent establishment  32

12‑260... Lender to notify borrower if interest derived through overseas permanent establishment        33

Royalties                                                                                                                     33

12‑280... Royalty payment to overseas person................................................. 33

12‑285... Royalty payment received for foreign resident.................................. 34

General                                                                                                                       34

12‑300... Limits on amount withheld under this Subdivision........................... 34

Subdivision 12‑FA—Departing Australia superannuation payments         35

12‑305... Departing Australia superannuation payment.................................... 35

12‑310... Limits on amount withheld under this Subdivision........................... 35

Subdivision 12‑FAA—Excess untaxed roll‑over amount
[see Note 2]                                                                                      36

12‑312... Untaxed roll‑over superannuation benefits........................................ 36

12‑313... Limits on amount withheld under this Subdivision........................... 36

Subdivision 12‑FB—Payments to foreign residents etc.                                 36

12‑315... Payment to foreign resident etc......................................................... 36

12‑317... Payment received for foreign resident etc.......................................... 38

12‑319... Exemptions from withholding obligations under this Subdivision.... 39

Subdivision 12‑G—Payments in respect of mining on Aboriginal land, and natural resources                40

Mining on Aboriginal land                                                                                    40

12‑320... Mining payment................................................................................ 40

Natural resources                                                                                                     41

12‑325... Natural resource payment.................................................................. 41

12‑330... Payer must ask Commissioner how much to withhold..................... 41

12‑335... Commissioner may exempt from section 12‑330, subject to conditions 42

Subdivision 12‑H—Distributions of managed investment trust income     43

Guide to Subdivision 12‑H                                                                                     43

12‑375... What this Subdivision is about.......................................................... 43

Operative provisions                                                                                               44

12‑385... Withholding by managed investment trusts....................................... 44

12‑390... Withholding by custodians and other entities.................................... 45

12‑395... Requirement to give notice or make information available................ 48

12‑400... Meaning of managed investment trust.............................................. 50

12‑401... Trusts with wholesale membership................................................... 52

12‑402... Widely‑held requirements—ordinary case........................................ 53

12‑402A Widely‑held requirements for registered MIT—special case for entities covered by subsection 12‑402(3)             56

12‑402B Closely‑held restrictions.................................................................... 57

12‑403... Licensing requirements for unregistered MIS................................... 57

12‑404... MIT participation interest.................................................................. 58

12‑405... Meaning of fund payment................................................................. 59

12‑410... Entity to whom payment is made...................................................... 61

12‑415... Failure to give notice or make information available: administrative penalty            61

12‑420... Agency rules..................................................................................... 62

Division 13—Alienated personal services payments                                       63

13‑1....... Object of this Division...................................................................... 63

13‑5....... Payment to the Commissioner in respect of alienated personal services payments   63

13‑10..... Alienated personal services payments............................................... 66

13‑15..... Personal services payment remitters.................................................. 66

13‑20..... Time for payments to Commissioner for alienated personal services payments made during 2000‑01    67

Division 14—Non‑cash benefits, and accruing gains, for which amounts must be paid to the Commissioner       69

Subdivision 14‑A—Non‑cash benefits                                                                 69

14‑1....... Object of this Subdivision................................................................. 69

14‑5....... Provider of non‑cash benefit must pay amount to the Commissioner if payment would be subject to withholding 69

14‑10..... Dividend, interest or royalty received, for a foreign resident, in the form of a non‑cash benefit               70

14‑15..... Payer can recover amount paid to the Commissioner........................ 71

Subdivision 14‑B—Accruing gains                                                                      71

14‑50..... Object of this Subdivision................................................................. 71

14‑55..... Liability for TFN withholding tax..................................................... 71

14‑60..... Investment body may recover TFN withholding tax from investor... 73

14‑65..... Application of rules in Division 18................................................... 73

14‑75..... Overpayment of TFN withholding tax.............................................. 74

14‑85..... Other laws do not exempt from TFN withholding tax...................... 74

Subdivision 14‑C—Shares and rights under employee share schemes       74

14‑155... Liability for TFN withholding tax (ESS).......................................... 75

14‑160... Employer may give individual tax file numbers to provider.............. 76

14‑165... Provider may recover TFN withholding tax (ESS) from individual.. 76

14‑170... Application of rules in Division 18................................................... 76

14‑175... Overpayment of TFN withholding tax (ESS)................................... 77

14‑180... Application of certain provisions of Division 83A of the Income Tax Assessment Act 1997   77

Division 15—Working out the amount to withhold                                         78

Guide to Division 15                                                                                                78

15‑1....... What this Division is about............................................................... 78

Subdivision 15‑A—Working out how much to withhold                                78

15‑10..... How much to withhold..................................................................... 79

15‑15..... Variation of amounts required to be withheld................................... 79

Subdivision 15‑B—Withholding schedules and regulations                          80

15‑25..... Commissioner’s power to make withholding schedules................... 80

15‑30..... Matters to be considered when making withholding schedules......... 81

15‑35..... Regulations about withholding.......................................................... 82

Subdivision 15‑C—Declarations                                                                          82

15‑50..... Declarations...................................................................................... 82

Division 16—Payer’s obligations and rights                                                     84

Guide to Division 16                                                                                                84

16‑1....... What this Division is about............................................................... 84

Subdivision 16‑A—To withhold                                                                            84

When to withhold                                                                                                      85

16‑5....... When to withhold an amount............................................................ 85

16‑20..... Payer discharged from liability to recipient for amount withheld...... 85

Penalties for not withholding                                                                                86

16‑25..... Failure to withhold: offence.............................................................. 86

16‑30..... Failure to withhold: administrative penalty for entity other than exempt Australian government agency  86

16‑35..... Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment other than dividend, interest or royalty............................................................... 87

16‑40..... Failure to withhold: administrative penalty for exempt Australian government agency in relation to dividend, interest or royalty payment................................................................................. 87

16‑43..... Failure to withhold: administrative penalty for exempt Australian government agency in relation to payment to foreign resident etc........................................................................................ 88

Subdivision 16‑B—To pay withheld amounts to the Commissioner           88

When and how to pay amounts to the Commissioner                                      89

16‑70..... Entity to pay amounts to Commissioner............................................ 89

16‑75..... When amounts must be paid to Commissioner................................. 89

16‑80..... Penalty for failure to pay within time................................................ 91

16‑85..... How amounts are to be paid.............................................................. 92

Who is a large, medium or small withholder                                                    92

16‑95..... Meaning of large withholder............................................................ 92

16‑100... Meaning of medium withholder........................................................ 93

16‑105... Meaning of small withholder............................................................ 94

16‑110... Commissioner may vary withholder’s status downwards................. 94

16‑115... Commissioner may vary withholder’s status upwards...................... 94

Subdivision 16‑BA—To be registered                                                                 95

Registration of withholders                                                                                   96

16‑140... Withholders must be registered......................................................... 96

16‑141... Registration and cancellation............................................................. 96

Branch registration                                                                                                 97

16‑142... Branches may be registered............................................................... 97

16‑143... Separate amounts for entities and branches....................................... 97

16‑144... Cancellation of branch registration.................................................... 98

16‑145... Effect on branches of cancelling the entity’s registration................... 98

Subdivision 16‑C—To provide information                                                     98

To the Commissioner                                                                                              99

16‑150... Commissioner must be notified of amounts...................................... 99

16‑152... Annual reports—Withholding payments covered by section 12‑175 99

16‑153... Annual reports—other payments.................................................... 100

To recipients of withholding payments                                                             103

16‑155... Annual payment summary.............................................................. 103

16‑156... Annual payment summary for sections 12‑175 and 12‑180............ 105

16‑157... Payment summary for Subdivision 12‑H........................................ 105

16‑160... Part‑year payment summary............................................................ 106

16‑165... Payment summaries for superannuation lump sums and payments for termination of employment         107

16‑166... Payment summary for a departing Australia superannuation payment 107

16‑167... Payment summary for payment to recipient who does not quote ABN 107

16‑170... Form and content of payment summary.......................................... 108

16‑175... Penalty for not providing payment summary.................................. 109

16‑180... Commissioner may exempt entity from giving payment summary.. 110

16‑182... Definition of reportable employer superannuation contribution.... 110

Subdivision 16‑D—Additional rights and obligations of entity that makes a payment                111

16‑195... Payer’s right to recover amounts of penalty: certain withholding taxes 111

Division 18—Recipient’s entitlements and obligations                                 113

Subdivision 18‑A—Crediting withheld amounts against liability for income tax, withholding tax or mining withholding tax                                                                          113

Guide to Subdivision 18‑A                                                                                    113

18‑1....... What this Subdivision is about........................................................ 113

General exception                                                                                                  114

18‑5....... No credit for refunded amount........................................................ 114

Entitlement to credits: income tax liability                                                     115

18‑10..... Application of sections 18‑15, 18‑20 and 18‑25............................. 115

18‑15..... Tax credit for recipient of withholding payments............................ 115

18‑20..... Tax credit where recipient is a partnership...................................... 115

18‑25..... Tax credit where recipient is a trust................................................. 116

18‑27..... Tax credit for alienated personal services payments........................ 118

Entitlement to credits: dividend, interest or royalty or amount attributable to fund payment  119

18‑30..... Credit: dividend, interest or royalty................................................. 119

18‑32..... Credit: amount attributable to fund payment.................................... 119

18‑35..... Credit: penalty under section 12‑415, 16‑30 or 16‑40 or related general interest charge          119

18‑40..... Credit: liability under Part 4‑25....................................................... 121

Entitlement to credit: departing Australia superannuation payment       122

18‑42..... Credit—departing Australia superannuation payment..................... 122

Entitlement to credit: mining payment                                                             123

18‑45..... Credit—mining payment................................................................. 123

Entitlement to credit: amount attributable to fund payment                      124

Subdivision 18‑B—Refund of certain withheld amounts                             124

18‑65..... Refund of withheld amounts by the payer to the recipient............... 124

18‑70..... Refund of withheld amounts by the Commissioner to the recipient 127

18‑80..... Refund by Commissioner of amount withheld from payment in respect of investment            128

Subdivision 18‑C—Recipient’s obligations                                                      129

18‑100... Obligation to keep payment summary............................................. 129

Division 20—Other matters                                                                                 130

Subdivision 20‑B—Offences                                                                                130

20‑35..... Offences.......................................................................................... 130

20‑40..... Joining of charges........................................................................... 131

20‑45..... Offences that would otherwise be committed by a partnership or unincorporated company    132

Subdivision 20‑D—Review of decisions                                                            132

20‑80..... Reviewable decisions...................................................................... 132

Division 21—Entitlements relating to insolvent ADIs and general insurers 134

Guide to Division 21                                                                                              134

21‑1....... What this Division is about............................................................. 134

Subdivision 21‑A—Treatment of some payments by APRA                       134

21‑5....... APRA treated like ADI or general insurance company................... 134

Part 2‑10—Pay as you go (PAYG) instalments                                          136

Division 45—Instalment payments                                                                    136

Guide to Division 45                                                                                              137

45‑1....... What this Division is about............................................................. 137

Subdivision 45‑A—Basic rules                                                                            138

45‑5....... Object of this Part........................................................................... 138

45‑10..... Application of Part.......................................................................... 139

45‑15..... Liability for instalments................................................................... 139

45‑20..... Information to be given to the Commissioner by certain payers...... 140

45‑25..... Penalty for failure to notify Commissioner..................................... 140

45‑30..... Credit for instalments payable......................................................... 141

Subdivision 45‑B—When instalments are due                                                142

45‑50..... Liability to pay instalments.............................................................. 142

45‑60..... Meaning of instalment quarter....................................................... 143

45‑61..... When quarterly instalments are due—payers of quarterly instalments 143

45‑70..... When annual instalments are due.................................................... 144

45‑75..... Instalments recoverable in same way as income tax........................ 144

45‑80..... General interest charge on late payment.......................................... 144

45‑90..... Commissioner may withdraw instalment rate.................................. 145

Subdivision 45‑C—Working out instalment amounts                                   145

45‑110... How to work out amount of quarterly instalment on instalment income basis          145

45‑112... Amount of instalment for quarterly payer who pays on basis of GDP‑adjusted notional tax   146

45‑115... How to work out amount of annual instalment............................... 147

45‑120... Meaning of instalment income........................................................ 148

Subdivision 45‑D—Quarterly payers                                                                151

45‑125... Quarterly payer who pays instalments on the basis of instalment income                151

45‑130... Quarterly payer who pays on the basis of GDP‑adjusted notional tax 153

45‑132... Quarterly payer who pays 4 instalments annually on the basis of GDP‑adjusted notional tax 154

45‑134... Quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax 155

Subdivision 45‑E—Annual payers                                                                     156

When you start and stop being an annual payer                                            157

45‑140... Choosing to pay annual instalments................................................ 157

45‑145... Meaning of instalment group.......................................................... 158

45‑150... Entity stops being annual payer if involved with GST registration or instalment group           159

45‑155... Entity stops being annual payer if notional tax is $8,000 or more, or entity chooses to pay quarterly      160

45‑160... Head company of a consolidated group stops being annual payer.. 160

Subdivision 45‑F—Varying the instalment rate for quarterly payers who pay on the basis of instalment income                                                                                                       161

45‑200... Application...................................................................................... 161

45‑205... Choosing a varied instalment rate.................................................... 161

45‑210... Notifying Commissioner of varied instalment rate.......................... 162

45‑215... Credit on using varied rate in certain cases...................................... 162

Subdivision 45‑G—General interest charge payable in certain cases if instalments are too low              163

45‑230... Liability to GIC on shortfall in quarterly instalment worked out on the basis of varied rate     164

45‑232... Liability to GIC on shortfall in quarterly instalment worked out on the basis of estimated benchmark tax               165

45‑233... Reduction in GIC liability under section 45‑232 if shortfall is made up in later instalment      174

45‑235... Liability to GIC on shortfall in annual instalment............................ 175

45‑240... Commissioner may remit general interest charge............................ 177

Subdivision 45‑H—Partnership income                                                           177

45‑260... Instalment income for a period in which you are in a partnership... 177

Subdivision 45‑I—Trust income included in instalment income of beneficiary            178

45‑280... Instalment income for a period in which you are a beneficiary of a trust  178

45‑285... Instalment income includes distributions by certain resident unit trusts 181

45‑286... Instalment income includes distributions by certain managed investment trusts       182

45‑287... When trusts are disqualified due to concentrated ownership........... 183

45‑288... Resident investment trusts for beneficiaries who are absolutely entitled.. 184

45‑290... Exceptions to exclusion of trust capital gains from beneficiary’s instalment income                185

Subdivision 45‑J—How Commissioner works out your instalment rate and notional tax          186

45‑320... Working out instalment rate............................................................ 186

45‑325... Working out your notional tax........................................................ 187

45‑330... Working out your adjusted taxable income..................................... 188

45‑335... Working out your adjusted withholding income............................. 191

45‑340... Adjusted tax on adjusted taxable income or on adjusted withholding income           191

Subdivision 45‑K—How Commissioner works out your benchmark instalment rate and benchmark tax             193

45‑355... When Commissioner works out benchmark instalment rate and benchmark tax      193

45‑360... How Commissioner works out benchmark instalment rate............ 194

45‑365... Working out your benchmark tax................................................... 194

45‑370... Working out your adjusted assessed taxable income for the variation year             195

45‑375... Adjusted assessed tax on adjusted assessed taxable income............ 196

Subdivision 45‑L—How Commissioner works out amount of quarterly instalment on basis of GDP‑adjusted notional tax                                                                                                 198

45‑400... Working out amount of instalment—payers of 4 quarterly instalments 198

45‑402... Working out amount of instalment—payers of 2 quarterly instalments 200

45‑405... Working out your GDP‑adjusted notional tax................................ 202

Subdivision 45‑M—How amount of quarterly instalment is worked out on basis of your estimate of your benchmark tax                                                                                                 203

45‑410... Working out amount of instalment—payers of 4 quarterly instalments 204

45‑412... Working out amount of instalment—payers of 2 quarterly instalments 205

45‑415... Estimating your benchmark tax....................................................... 207

45‑420... Credit in certain cases where amount of instalment is nil................ 208

Subdivision 45‑N—How this Part applies to the trustee of a trust             208

Trustees to whom this Part applies                                                                    209

45‑450... Trustees to whom a single instalment rate is given.......................... 209

45‑455... Trustees to whom several instalment rates are given....................... 209

45‑460... Rest of Subdivision applies only to multi‑rate trustees.................... 211

45‑465... Meaning of instalment income........................................................ 211

45‑468... Multi‑rate trustee may pay quarterly instalments............................. 211

How Commissioner works out instalment rate and notional tax for a multi‑rate trustee            211

45‑470... Working out instalment rate............................................................ 211

45‑473... Commissioner must notify you of notional tax............................... 212

45‑475... Working out your notional tax........................................................ 212

45‑480... Working out your adjusted taxable income..................................... 213

45‑483... Meaning of reduced beneficiary’s share and reduced no beneficiary’s share         214

45‑485... Working out your adjusted withholding income............................. 214

How Commissioner works out benchmark instalment rate and benchmark tax for a multi‑rate trustee                215

45‑525... When Commissioner works out benchmark instalment rate and benchmark tax      215

45‑530... How Commissioner works out benchmark instalment rate............ 215

45‑535... Working out your benchmark tax................................................... 216

Subdivision 45‑P—Anti‑avoidance rules                                                          216

45‑595... Object of this Subdivision............................................................... 217

45‑600... General interest charge on tax benefit relating to instalments.......... 217

45‑605... When do you get a tax benefit from a scheme?................................ 219

45‑610... What is your tax position for an income year?................................ 219

45‑615... What is your hypothetical tax position for an income year?............ 222

45‑620... Amount on which GIC is payable, and period for which it is payable 222

45‑625... Credit if you also got a tax detriment from the scheme.................... 223

45‑630... When do you get a tax detriment from a scheme?........................... 224

45‑635... No tax benefit or detriment results from choice for which income tax law expressly provides                225

45‑640... Commissioner may remit general interest charge in special cases... 226

Subdivision 45‑Q—General rules for consolidated groups                         227

Guide to Subdivision 45‑Q                                                                                   227

45‑700... What this Subdivision is about........................................................ 227

Application of Subdivision                                                                                   228

45‑705... Application of Subdivision to head company.................................. 228

Usual operation of this Part for consolidated group members                  231

45‑710... Single entity rule............................................................................. 231

45‑715... When instalments are due—modification of section 45‑61............. 232

45‑720... Head company cannot be an annual payer—modification of section 45‑140            232

Membership changes                                                                                             232

45‑740... Change of head company................................................................ 232

45‑755... Entry rule (for an entity that becomes a subsidiary member of a consolidated group)              235

45‑760... Exit rule (for an entity that ceases to be a subsidiary member of a consolidated group)           236

45‑775... Commissioner’s power to work out different instalment rate or GDP‑adjusted notional tax    237

Subdivision 45‑R—Special rules for consolidated groups                           239

Guide to Subdivision 45‑R                                                                                    239

45‑850... What this Subdivision is about........................................................ 239

Operative provisions                                                                                             240

45‑855... Section 701‑1 disregarded for certain purposes.............................. 240

45‑860... Member having a different instalment period.................................. 240

45‑865... Credit rule....................................................................................... 242

45‑870... Head company’s liability to GIC on shortfall in quarterly instalment 243

45‑875... Other rules about the general interest charge................................... 245

45‑880... Continued application of Subdivision 45‑Q to the head company of an acquired group          246

45‑885... Early application of Subdivision 45‑Q to the head company of a new group           248

Subdivision 45‑S—MEC groups                                                                         249

Guide to Subdivision 45‑S                                                                                    249

45‑900... What this Subdivision is about........................................................ 249

Preliminary      250

45‑905... Objects of Subdivision.................................................................... 250

General modification rules                                                                                  250

45‑910... Extended operation of Part to cover MEC groups........................... 250

Extended operation of Subdivision 45‑Q                                                         251

45‑913... Sections 45‑705 and 45‑740 do not apply to members of MEC groups.. 251

45‑915... Application of Subdivision 45‑Q to provisional head company...... 252

45‑917... Assumption for applying section 45‑710 (single entity rule).......... 255

45‑920... Change of provisional head company............................................. 255

45‑922... Life insurance company.................................................................. 258

Extended operation of Subdivision 45‑R                                                          258

45‑925... Additional modifications of sections 45‑855 and 45‑860................ 258

45‑930... Modifications of sections 45‑865 and 45‑870 and a related provision 259

45‑935... Additional modifications of section 45‑885.................................... 259

Part 2‑30—Collecting Medicare levy with income tax                           261

Division 90—Medicare levy and Medicare levy surcharge                        261

Subdivision 90‑A—Treatment like income tax                                               261

90‑1....... Laws apply in relation to Medicare levy and Medicare levy surcharge as they apply in relation to income tax        261

Chapter 3—Collection, recovery and administration of other taxes  262

Part 3‑10—Indirect taxes                                                                                       262

Division 105—General rules for indirect taxes                                              262

Guide to Division 105                                                                                            262

105‑1..... What this Division is about............................................................. 262

Subdivision 105‑A—Assessments                                                                       263

105‑5..... Commissioner may make assessment of indirect tax....................... 263

105‑10... Request for assessment................................................................... 264

105‑15... Indirect tax liabilities do not depend on assessment........................ 264

105‑20... Commissioner must give notice of the assessment.......................... 265

105‑25... Amendment of assessment.............................................................. 265

105‑30... Later assessment prevails in case of inconsistency.......................... 265

Subdivision 105‑B—Review of indirect tax decisions                                   265

105‑40... Reviewable indirect tax decisions.................................................... 265

Subdivision 105‑C—Limits on credits, refunds and recovering amounts 266

105‑50... Time limit on recovery by the Commissioner.................................. 266

105‑55... Time limit on refunds etc. from the Commissioner......................... 267

105‑65... Restriction on GST refunds............................................................ 269

Subdivision 105‑D—General interest charge and penalties                        270

105‑80... General interest charge.................................................................... 270

105‑85... Amending Acts cannot impose penalties or general interest charge earlier than 28 days after Royal Assent            271

Subdivision 105‑E—Evidence                                                                             271

105‑100. Production of assessment or declaration is conclusive evidence..... 272

105‑105. Certificate of amount payable is prima facie evidence..................... 272

105‑110. Signed copies are evidence.............................................................. 272

Subdivision 105‑F—Indirect tax refund schemes                                          273

105‑120. Refund scheme—defence related international obligations.............. 273

105‑125. Refund scheme—international obligations...................................... 274

Subdivision 105‑G—Other administrative provisions                                 274

105‑140. Address for service......................................................................... 275

105‑145. Commissioner must give things in writing...................................... 276

Division 110—Goods and services tax                                                              277

Guide to Division 110                                                                                            277

110‑1..... What this Division is about............................................................. 277

Subdivision 110‑F—Review of GST decisions                                                277

110‑50... Reviewable GST decisions............................................................. 277

Division 111—Wine tax and luxury car tax                                                    281

Guide to Division 111                                                                                            281

111‑1..... What this Division is about............................................................. 281

Subdivision 111‑C—Review of wine tax decisions                                         281

111‑50... Reviewable wine tax decisions........................................................ 281

Subdivision 111‑D—Effect on contracts from amendments to laws         282

111‑60... Alteration of contracts if cost of complying with agreement is affected by later alteration to wine tax or luxury car tax laws................................................................................................. 282

Division 112—Fuel tax                                                                                         284

Guide to Division 112                                                                                            284

112‑1..... What this Division is about............................................................. 284

Subdivision 112‑E—Review of fuel tax decisions                                          284

112‑50... Reviewable fuel tax decisions......................................................... 284

Chapter 4—Generic collection and recovery rules                                        286

Part 4‑15—Collection and recovery of tax‑related liabilities and other amounts           286

Division 250—Introduction                                                                                 286

Subdivision 250‑A—Guide to Part 4‑15                                                           286

250‑1..... What this Part is about.................................................................... 286

250‑5..... Some important concepts about tax‑related liabilities...................... 286

250‑10... Summary of tax‑related liabilities.................................................... 287

Subdivision 250‑B—Object of this Part                                                            293

250‑25... Object.............................................................................................. 293

Division 255—General rules about collection and recovery                      294

Subdivision 255‑A—Tax‑related liabilities                                                     294

255‑1..... Meaning of tax‑related liability....................................................... 294

255‑5..... Recovering a tax‑related liability that is due and payable................. 294

Subdivision 255‑B—Commissioner’s power to vary payment time          295

255‑10... To defer the payment time............................................................... 295

255‑15... To permit payments by instalments................................................. 296

255‑20... To bring forward the payment time in certain cases........................ 296

Subdivision 255‑C—Recovery proceedings                                                    297

Guide to Subdivision 255‑C                                                                                 297

255‑35... What this Subdivision is about........................................................ 297

Operative provisions                                                                                             297

255‑40... Service of documents if person absent from Australia or cannot be found               297

255‑45... Evidentiary certificate...................................................................... 298

255‑50... Certain statements or averments...................................................... 299

255‑55... Evidence by affidavit....................................................................... 300

Subdivision 255‑D—Security deposits                                                              300

255‑100. Commissioner may require security deposit.................................... 300

255‑105. Notice of requirement to give security............................................. 301

255‑110. Offence........................................................................................... 302

Division 260—Special rules about collection and recovery                        303

Guide to Division 260                                                                                            303

260‑1..... What this Division is about............................................................. 303

Subdivision 260‑A—From third party                                                              303

260‑5..... Commissioner may collect amounts from third party...................... 303

260‑10... Notice to Commonwealth, State or Territory................................... 305

260‑15... Indemnity........................................................................................ 305

260‑20... Offence........................................................................................... 306

Subdivision 260‑B—From liquidator                                                               306

260‑40... Subdivision does not apply to superannuation guarantee charge..... 306

260‑45... Liquidator’s obligation.................................................................... 306

260‑50... Offence........................................................................................... 308

260‑55... Joint liability of 2 or more liquidators............................................. 308

260‑60... Liquidator’s other obligation or liability.......................................... 308

Subdivision 260‑C—From receiver                                                                   308

260‑75... Receiver’s obligation....................................................................... 308

260‑80... Offence........................................................................................... 310

260‑85... Joint liability of 2 or more receivers................................................ 310

260‑90... Receiver’s other obligation or liability............................................. 310

Subdivision 260‑D—From agent winding up business for foreign resident principal  310

260‑105. Obligation of agent winding up business for foreign resident principal 310

260‑110. Offence........................................................................................... 311

260‑115. Joint liability of 2 or more agents.................................................... 312

260‑120. Agent’s other obligation or liability................................................. 312

Subdivision 260‑E—From deceased person’s estate                                     312

260‑140. Administered estate......................................................................... 312

260‑145. Unadministered estate..................................................................... 313

260‑150. Commissioner may authorise amount to be recovered.................... 314

Division 263—Mutual assistance in collection of foreign tax debts          315

Subdivision 263‑A—Foreign revenue claims                                                  315

Guide to Subdivision 263‑A                                                                                 315

263‑5..... What this Subdivision is about........................................................ 315

Operative provisions                                                                                             316

263‑10... Meaning of foreign revenue claim................................................... 316

263‑15... Requirements for foreign revenue claims........................................ 316

263‑20... Foreign Revenue Claims Register................................................... 316

263‑25... Registering claims........................................................................... 317

263‑30... When amount is due and payable.................................................... 317

263‑35... Amending the Register etc.............................................................. 318

263‑40... Payment to competent authority...................................................... 319

Division 265—Other matters                                                                              320

Subdivision 265‑A—Right of person to seek recovery or contribution    320

Guide to Subdivision 265‑A                                                                                 320

265‑35... What this Subdivision is about........................................................ 320

Operative provisions                                                                                             320

265‑40... Right of recovery if another person is liable.................................... 320

265‑45... Right of contribution if persons are jointly liable............................ 321

Subdivision 265‑B—Application of laws                                                          321

265‑65... Non‑application of certain taxation laws......................................... 321

Division 268—Estimates and recovery of PAYG withholding liabilities 322

Guide to Division 268                                                                                            322

268‑1..... What this Division is about............................................................. 322

Subdivision 268‑A—Object                                                                                  322

268‑5..... Object of Division........................................................................... 323

Subdivision 268‑B—Making estimates                                                             323

268‑10... Commissioner may make estimate.................................................. 323

268‑15... Notice of estimate............................................................................ 324

Subdivision 268‑C—Liability to pay estimates                                              324

268‑20... Nature of liability to pay estimate.................................................... 325

268‑25... Accuracy of estimate irrelevant to liability to pay............................ 326

268‑30... Estimate provable in bankruptcy or winding up.............................. 326

Subdivision 268‑D—Reducing and revoking estimates                                327

268‑35... How estimate may be reduced or revoked—Commissioner’s powers 327

268‑40... How estimate may be reduced or revoked—statutory declaration or affidavit          328

268‑45... How estimate may be reduced or revoked—rejection of proof of debt 330

268‑50... How estimate may be reduced—amount paid or applied................. 332

268‑55... When reduction or revocation takes effect....................................... 332

268‑60... Consequences of reduction or revocation—refund......................... 333

268‑65... Consequences of reduction or revocation—statutory demand changed or set aside 333

268‑70... Consequences of reduction or revocation—underlying
liability............................................................................................ 334

Subdivision 268‑E—Late payment of estimates                                             334

268‑75... Liability to pay the general interest charge....................................... 334

268‑80... Effect of paying the general interest charge..................................... 335

Subdivision 268‑F—Miscellaneous                                                                    336

268‑85... Effect of judgment on liability on which it is based......................... 336

268‑90... Requirements for statutory declaration or affidavit.......................... 337

268‑95... Liquidators, receivers and trustees in bankruptcy............................ 339

268‑100. Division not to limit or exclude Corporations or Bankruptcy Act... 340

Division 269—Penalties for directors of non‑complying companies       341

Guide to Division 269                                                                                            341

269‑1..... What this Division is about............................................................. 341

Subdivision 269‑A—Object and scope                                                              341

269‑5..... Object of Division........................................................................... 342

269‑10... Scope of Division........................................................................... 342

Subdivision 269‑B—Obligations and penalties                                              343

269‑15... Directors’ obligations...................................................................... 343

269‑20... Penalty............................................................................................ 344

269‑25... Notice.............................................................................................. 345

269‑30... Remission of penalty before end of notice period........................... 345

269‑35... Defences......................................................................................... 346

Subdivision 269‑C—Discharging liabilities                                                    347

269‑40... Effect of director paying penalty or company discharging liability.. 347

269‑45... Directors’ rights of indemnity and contribution.............................. 348

Subdivision 269‑D—Miscellaneous                                                                   348

269‑50... How notice may be given................................................................ 348

269‑55... Division not to limit or exclude Corporations Act........................... 348

Part 4‑25—Charges and penalties                                                                     349

Division 280—Shortfall interest charge                                                           349

Guide to Division 280                                                                                            349

280‑1..... Guide to Division 280..................................................................... 349

Subdivision 280‑A—Object of Division                                                            349

280‑50... Object of Division........................................................................... 349

Subdivision 280‑B—Shortfall interest charge                                                350

280‑100. Liability to shortfall interest charge—income tax............................ 350

280‑102. Liability to shortfall interest charge—petroleum resource rent tax... 351

280‑102A  Liability to shortfall interest charge—excess contributions tax.... 351

280‑103. Liability to shortfall interest charge—general.................................. 352

280‑105. Amount of shortfall interest charge................................................. 352

280‑110. Notification by Commissioner........................................................ 353

Subdivision 280‑C—Remitting shortfall interest charge                             353

280‑160. Remitting shortfall interest charge................................................... 353

280‑165. Commissioner must give reasons for not remitting in certain cases 354

280‑170. Objecting against remission decision.............................................. 354

Division 284—Administrative penalties for statements, unarguable positions and schemes      355

Guide to Division 284                                                                                            355

284‑5..... What this Division is about............................................................. 355

Subdivision 284‑A—General provisions                                                          355

284‑10... Object of Division........................................................................... 356

284‑15... When a matter is reasonably arguable............................................ 356

284‑20... Which statements this Division applies to....................................... 356

284‑25... Statements by agents....................................................................... 357

284‑30... Application of Division to trusts..................................................... 357

284‑35... Application of Division to partnerships.......................................... 357

Subdivision 284‑B—Penalties relating to statements                                    358

Guide to Subdivision 284‑B                                                                                 358

284‑70... What this Subdivision is about........................................................ 358

Operative provisions                                                                                             359

284‑75... Liability to penalty........................................................................... 359

284‑80... Shortfall amounts............................................................................ 360

284‑85... Amount of penalty.......................................................................... 362

284‑90... Base penalty amount....................................................................... 363

284‑95... Joint and several liability of directors of corporate trustee that makes a false or misleading statement     365

Subdivision 284‑C—Penalties relating to schemes                                        366

Guide to Subdivision 284‑C                                                                                 366

284‑140. What this Subdivision is about........................................................ 366

Operative provisions                                                                                             366

284‑145. Liability to penalty........................................................................... 366

284‑150. Scheme benefits and scheme shortfall amounts............................... 367

284‑155. Amount of penalty.......................................................................... 368

284‑160. Base penalty amount: schemes........................................................ 369

Subdivision 284‑D—Provisions common to Subdivisions 284‑B and 284‑C 369

284‑220. Increase in base penalty amount...................................................... 370

284‑224. Reduction of base penalty amount if law was applied in an accepted way                371

284‑225. Reduction of base penalty amount if you voluntarily tell the Commissioner            371

Division 286—Penalties for failing to lodge documents on time               373

Subdivision 286‑A—Guide to Division 286                                                     373

286‑1..... What this Division is about............................................................. 373

Subdivision 286‑B—Object of Division                                                            373

286‑25... Object of Division........................................................................... 373

Subdivision 286‑C—Penalties for failing to lodge documents on time    374

286‑75... Liability to penalty........................................................................... 374

286‑80... Amount of penalty.......................................................................... 376

Division 288—Miscellaneous administrative penalties                                378

288‑10... Penalty for non‑electronic notification............................................. 378

288‑20... Penalty for non‑electronic payment................................................. 379

288‑25... Penalty for failure to keep or retain records..................................... 379

288‑30... Penalty for failure to retain or produce declarations........................ 379

288‑35... Penalty for preventing access etc..................................................... 380

288‑40... Penalty for failing to register or cancel registration......................... 380

288‑45... Penalty for failing to issue tax invoice etc....................................... 380

288‑50... Penalty for both principal and agent issuing certain
documents....................................................................................... 381

288‑70... Administrative penalties for life insurance companies..................... 381

288‑75... Administrative penalty for a copyright or resale royalty collecting society               383

288‑80... Administrative penalty for over declaring conduit foreign income.. 383

288‑90... Failing to give release authority for excess non‑concessional contributions tax       385

288‑95... Failing to comply etc. with release authority................................... 385

288‑100. Excess money paid under release authority..................................... 385

288‑105. Superannuation provider to calculate crystallised pre‑July 83 amount of superannuation interest by 30 June 2008 386

Division 290—Promotion and implementation of schemes                        387

Subdivision 290‑A—Objects of this Division                                                   387

290‑5..... Objects of this Division.................................................................. 387

Subdivision 290‑B—Civil penalties                                                                   387

290‑50... Civil penalties.................................................................................. 388

290‑55... Exceptions....................................................................................... 390

290‑60... Meaning of promoter...................................................................... 391

290‑65... Meaning of tax exploitation scheme................................................ 392

Subdivision 290‑C—Injunctions                                                                         393

290‑120. Conduct to which this Subdivision applies..................................... 393

290‑125. Injunctions...................................................................................... 393

290‑130. Interim injunctions.......................................................................... 393

290‑135. Delay in making ruling.................................................................... 394

290‑140. Discharge etc. of injunctions........................................................... 394

290‑145. Certain limits on granting injunctions not to apply.......................... 394

290‑150. Other powers of the Federal Court unaffected................................ 395

Subdivision 290‑D—Voluntary undertakings                                                 395

290‑200. Voluntary undertakings................................................................... 395

Division 298—Machinery provisions for penalties                                       397

Subdivision 298‑A—Administrative penalties                                                397

298‑5..... Scope of Subdivision...................................................................... 397

298‑10... Notification of liability.................................................................... 397

298‑15... Due date for penalty........................................................................ 398

298‑20... Remission of penalty....................................................................... 398

298‑25... General interest charge on unpaid penalty....................................... 398

298‑30... Assessment of penalties under Division 284.................................. 399

Subdivision 298‑B—Civil penalties                                                                   399

298‑80... Application of Subdivision............................................................. 399

298‑85... Civil evidence and procedure rules for civil penalty orders............. 400

298‑90... Civil proceedings after criminal proceedings................................... 400

298‑95... Criminal proceedings during civil proceedings............................... 400

298‑100. Criminal proceedings after civil proceedings................................... 400

298‑105. Evidence given in proceedings for penalty not admissible in criminal proceedings  401

298‑110. Civil double jeopardy...................................................................... 401

Part 4‑50—Release from particular liabilities                                            402

Division 340—Commissioner’s power in cases of hardship                        402

Guide to Division 340                                                                                            402

340‑1..... What this Division is about............................................................. 402

Operative provisions                                                                                             402

340‑5..... Release from particular liabilities in cases of serious hardship........ 402

340‑10... Liabilities to which this section applies........................................... 404

340‑15... Commissioner may take action to give effect to a release decision.. 405

340‑20... Extinguishing your liability to pay a fringe benefits tax instalment if you are released             406

340‑25... Extinguishing your liability to pay a PAYG instalment if you are released              406

Division 342—Commissioner’s power relating to proceeds of crime proceedings       407

Guide to Division 342                                                                                            407

342‑1..... What this Division is about............................................................. 407

Subdivision 342‑A—Power to waive right to payment of tax‑related liabilities            407

342‑5..... Object of this Subdivision............................................................... 407

342‑10... Power to waive right to payment of tax‑related liability.................. 408

Chapter 5—Administration                                                                                         409

Part 5‑1—The Australian Taxation Office                                                   409

Division 352—Accountability of the Commissioner                                     409

Guide to Division 352                                                                                            409

352‑1..... What this Division is about............................................................. 409

Subdivision 352‑A—Accountability of the Commissioner in respect of indirect tax laws           409

352‑5..... Commissioner must prepare annual report on indirect tax
laws................................................................................................. 409

Division 353—Powers to obtain information and evidence                        411

353‑10... Commissioner’s power................................................................... 411

353‑15... Access to premises for the purposes of the indirect tax laws.......... 412

353‑20... Checking status of specifically listed deductible gift recipients....... 413

Division 355—Confidentiality of taxpayer information                             415

Guide to Division 355                                                                                            415

355‑1..... What this Division is about............................................................. 415

Subdivision 355‑A—Objects and application of Division                            415

355‑10... Objects of Division......................................................................... 416

355‑15... Application of Division................................................................... 416

Subdivision 355‑B—Disclosure of protected information by taxation officers             417

Guide to Subdivision 355‑B                                                                                 417

355‑20... What this Subdivision is about........................................................ 417

Operative provisions                                                                                             417

355‑25... Offence—disclosure of protected information by taxation officers. 417

355‑30... Meaning of protected information and taxation officer................... 418

355‑35... Consent is not a defence.................................................................. 419

355‑40... Generality of Subdivision not limited.............................................. 419

355‑45... Exception—disclosure of publicly available information................ 419

355‑50... Exception—disclosure in performing duties................................... 420

355‑55... Exception—disclosure to Ministers................................................ 421

355‑60... Limits on disclosure to Ministers.................................................... 423

355‑65... Exception—disclosure for other government purposes................... 423

355‑70... Exception—disclosure for law enforcement and related purposes.. 434

355‑75... Limits on disclosure to courts and tribunals.................................... 439

Subdivision 355‑C—On‑disclosure of protected information by other people               440

Guide to Subdivision 355‑C                                                                                 440

355‑150. What this Subdivision is about........................................................ 440

Operative provisions                                                                                             440

355‑155. Offence—on‑disclosure of protected information by other people.. 440

355‑160. Consent is not a defence.................................................................. 441

355‑165. Generality of Subdivision not limited.............................................. 441

355‑170. Exception—on‑disclosure of publicly available information........... 441

355‑175. Exception—on‑disclosure for original purpose............................... 442

355‑180. Exception—on‑disclosure to Ministers in relation to statutory powers or functions                443

355‑185. Exception—on‑disclosure in relation to IGIS................................. 443

355‑190. Exception—on‑disclosure in relation to ASIO................................ 444

355‑195. Exception—on‑disclosure by Royal Commissions......................... 445

355‑200. Exception—records made in compliance with Australian laws....... 445

355‑205. Limits on on‑disclosure to courts or tribunals................................. 446

355‑210. Limits on on‑disclosure to Ministers............................................... 446

Subdivision 355‑D—Disclosure of protected information that has been unlawfully acquired   447

Guide to Subdivision 355‑D                                                                                 447

355‑260. What this Subdivision is about........................................................ 447

Operative provisions                                                                                             447

355‑265. Offence—disclosure of protected information acquired in breach of a taxation law 447

355‑270. Exception—disclosure of publicly available information................ 448

355‑275. Exception—disclosure in relation to a taxation law......................... 448

355‑280. Limits on disclosure to courts and tribunals.................................... 448

Subdivision 355‑E—Other matters                                                                    449

Guide to Subdivision 355‑E                                                                                 449

355‑320. What this Subdivision is about........................................................ 449

Operative provisions                                                                                             449

355‑325. Oath or affirmation to protect information....................................... 449

355‑330. Injunctions to prevent contravention of non‑disclosure provisions. 450

355‑335. Procedures for disclosing protected information............................. 451

Division 356—General administration of tax laws                                       453

Guide to Division 356                                                                                            453

356‑1..... What this Division is about............................................................. 453

Subdivision 356‑A—Indirect tax laws                                                               453

356‑5..... Commissioner has general administration of indirect tax laws........ 453

Part 5‑5—Rulings                                                                                                       454

Division 357—Object and common rules                                                         454

Guide to Division 357                                                                                            454

357‑1..... What this Division is about............................................................. 454

Subdivision 357‑A—Object of this Part                                                            454

357‑5..... Object of this Part........................................................................... 455

Subdivision 357‑B—Common rules for rulings                                             455

Rules for all rulings                                                                                               456

357‑50... Scope of Division........................................................................... 456

357‑55... The provisions that are relevant for rulings..................................... 456

357‑60... When rulings are binding on the Commissioner............................. 457

357‑65... Stopping relying on a ruling............................................................ 459

357‑70... Commissioner may apply the law if more favourable than the ruling 460

357‑75... Inconsistent rulings......................................................................... 460

357‑80... Contracts for schemes..................................................................... 462

357‑85... Effect on ruling if relevant provision re‑enacted.............................. 462

357‑90... Validity of ruling not affected by formal defect............................... 462

Common rules for public and private rulings                                                463

357‑95... Electronic communications.............................................................. 463

357‑100. Evidence.......................................................................................... 463

Common rules for private and oral rulings                                                    463

357‑105. Further information must be sought................................................ 463

357‑110. Assumptions in making private or oral ruling................................. 464

357‑115. Additional information provided by applicant................................. 464

357‑120. Commissioner may take into account information from third parties 464

357‑125. Applications and objections not to affect obligations and powers... 465

Division 358—Public rulings                                                                              466

Guide to Division 358                                                                                            466

358‑1..... What this Division is about............................................................. 466

Making public rulings                                                                                           466

358‑5..... What is a public ruling?................................................................... 466

358‑10... Application of public rulings........................................................... 467

358‑15... When a public ruling ceases to apply.............................................. 467

Withdrawing public rulings                                                                                 467

358‑20... Withdrawing public rulings............................................................. 467

Division 359—Private rulings                                                                            469

Guide to Division 359                                                                                            469

359‑1..... What this Division is about............................................................. 469

Private rulings 470

359‑5..... Private rulings................................................................................. 470

359‑10... Applying for a private ruling........................................................... 470

359‑15... Private rulings to be given to applicants.......................................... 470

359‑20... Private rulings must contain certain details...................................... 470

359‑25... Time of application of private rulings.............................................. 471

359‑30... Ruling for trustee of a trust............................................................. 471

359‑35... Dealing with applications................................................................ 471

359‑40... Valuations....................................................................................... 472

359‑45... Related rulings................................................................................ 473

359‑50... Delays in making private rulings..................................................... 473

359‑55... Revised private rulings.................................................................... 475

359‑60... Objections, reviews and appeals relating to private rulings............. 475

359‑65... Commissioner may consider new information on objection............ 476

359‑70... Successful objection decision alters ruling...................................... 476

Division 360—Oral rulings                                                                                 478

Guide to Division 360                                                                                            478

360‑1..... What this Division is about............................................................. 478

Oral rulings      478

360‑5..... Applying for and making of oral rulings......................................... 478

360‑10... Withdrawing an application for an oral ruling................................. 480

360‑15... Commissioner determinations......................................................... 480

Division 361—Non‑ruling advice and general administrative practice  481

361‑5..... Non‑ruling advice and general administrative practice.................... 481

Part 5‑25—Record‑keeping and other obligations of taxpayers      482

Division 382—Record‑keeping                                                                           482

Guide to Division 382                                                                                            482

382‑1..... What this Division is about............................................................. 482

Subdivision 382‑A—Keeping records of indirect tax transactions           482

382‑5..... Keeping records of indirect tax transactions.................................... 482

Subdivision 382‑B—Record keeping obligations of deductible gift recipients               486

382‑15... Deductible gift recipients to keep records........................................ 486

Division 388—Requirements about giving material to the Commissioner 488

Subdivision 388‑A—Object of Division                                                            488

388‑5..... Object of Division........................................................................... 488

Subdivision 388‑B—General provisions                                                          488

388‑50... Approved forms.............................................................................. 488

388‑52... Saturdays, Sundays and public holidays......................................... 489

388‑55... Commissioner may defer time for lodgment................................... 489

388‑60... Declaration by entity....................................................................... 490

388‑65... Declaration by entity where agent gives document.......................... 490

388‑70... Declaration by agent........................................................................ 490

388‑75... Signing declarations........................................................................ 491

388‑80... Electronic notification of BAS amounts.......................................... 492

388‑85... Truncating amounts......................................................................... 492

Division 390—Superannuation reporting                                                        493

Guide to Division 390                                                                                            493

390‑1..... What this Division is about............................................................. 493

Subdivision 390‑A—Contributions statements and roll‑over superannuation benefit statements etc.     493

390‑5..... Contributions statements................................................................. 493

390‑10... Statements about roll‑over superannuation benefits etc................... 496

390‑15... Superannuation statements to members........................................... 498

Subdivision 390‑B—Statements relating to release authorities                 498

390‑65... Statements relating to release authorities......................................... 498

Subdivision 390‑C—Other statements                                                              499

390‑115. Change or omission in information given to the Commissioner...... 499

Division 391—First home saver account reporting                                      501

Guide to Division 391                                                                                            501

391‑1..... What this Division is about............................................................. 501

Subdivision 391‑A—Account activity statements                                           501

391‑5..... FHSA account activity statements................................................... 501

Subdivision 391‑B—Transfer statements                                                        503

391‑10... Statements about transfer payments between FHSAs etc................ 503

Division 392—Employee share scheme reporting                                         505

Guide to Division 392                                                                                            505

392‑1..... What this Division is about............................................................. 505

Subdivision 392‑A—Statements                                                                          505

392‑5..... Statements by providers.................................................................. 505

392‑10... Change or omission in information given to the Commissioner...... 508

Subdivision 392‑B—Miscellaneous                                                                   509

392‑15... Application of certain provisions of Division 83A of the Income Tax Assessment Act 1997   509

Division 394—Reporting about forestry managed investment schemes  510

Guide to Division 394                                                                                            510

394‑1..... What this Division is about............................................................. 510

394‑5..... Statements about initial contributions to scheme............................. 510

394‑10... Statements about failure to establish trees within 18 months........... 511

Division 398—Miscellaneous reporting obligations                                     513

Guide to Division 398                                                                                            513

398‑1..... What this Division is about............................................................. 513

Subdivision 398‑A—Farm Management Deposit reporting                        513

398‑5..... Reporting to Agriculture Department.............................................. 513

Part 5‑30—Payment, ABN and identification verification system   515

Division 400—Guide to Part 5‑30                                                                      515

400‑1..... What Part 5‑30 is about................................................................... 515

400‑5..... The payment, ABN and identification verification system.............. 515

Division 405—Transaction reporting by purchasers                                   516

405‑5..... Payments to which this Division applies......................................... 516

405‑10... Reporting requirements................................................................... 516

405‑15... Invoices produced by purchasers.................................................... 517

Division 410—Transaction reporting by suppliers                                       518

410‑5..... Payments to which this Division applies......................................... 518

410‑10... Reporting requirements................................................................... 518

410‑15... Invoices produced by purchasers.................................................... 519

Division 415—Verification of suppliers’ ABNs by purchasers                  520

415‑5..... Payments to which this Division applies......................................... 520

415‑10... ABN verification requirements....................................................... 520

415‑15... Method of obtaining ABN verification........................................... 521

415‑20... Verification applies to later payments.............................................. 521

Division 417—Verification of suppliers’ identities by purchasers            522

417‑5..... Payments to which this Division applies......................................... 522

417‑10... Identity verification requirements.................................................... 522

417‑15... Method of obtaining identity verification........................................ 523

417‑20... Verification applies to later payments.............................................. 523

Division 420—Penalties for not reporting or verifying                               524

420‑5..... Failing to report or verify: administrative penalty............................ 524

Division 425—Other matters                                                                              525

425‑20... Constructive payment...................................................................... 525

425‑25... Non‑cash benefits........................................................................... 525

Part 5‑35—Registration and similar processes for various taxes    526

Division 426—Process of endorsing charities and other entities               526

Guide to Division 426                                                                                            526

426‑1..... What this Division is about............................................................. 526

Subdivision 426‑A—Application of Subdivision 426‑B to various kinds of endorsement           527

426‑5..... Application of Subdivision 426‑B to various kinds of endorsement 527

426‑10... How Subdivision 426‑B applies to government entities in relation to endorsement under section 30‑120 of the Income Tax Assessment Act 1997................................................................ 528

Subdivision 426‑B—Process of endorsement etc.                                          528

426‑15... Applying for endorsement.............................................................. 529

426‑20... Dealing with an application for endorsement.................................. 529

426‑25... Notifying outcome of application for endorsement......................... 530

426‑30... Date of effect of endorsement......................................................... 530

426‑35... Review of refusal of endorsement................................................... 531

426‑40... Checking entitlement to endorsement.............................................. 531

426‑45... Telling Commissioner of loss of entitlement to endorsement.......... 532

426‑50... Partnerships and unincorporated bodies.......................................... 532

426‑55... Revoking endorsement.................................................................... 533

426‑60... Review of revocation of endorsement............................................. 534

Subdivision 426‑C—Entries on Australian Business Register                    534

426‑65... Entries on Australian Business Register......................................... 534

Subdivision 426‑D—Public and private ancillary funds                              536

Guide to Subdivision 426‑D                                                                                 536

426‑100. What this Subdivision is about........................................................ 536

Public ancillary funds                                                                                           537

426‑102. Public ancillary funds...................................................................... 537

426‑103. Public ancillary fund guidelines...................................................... 538

426‑104. Australian Business Register must show public ancillary fund status 538

Private ancillary funds                                                                                         538

426‑105. Private ancillary funds..................................................................... 538

426‑110. Private ancillary fund guidelines..................................................... 539

426‑115. Australian Business Register must show private ancillary fund status 539

Administrative penalties                                                                                       540

426‑120. Administrative penalties for trustees of ancillary funds................... 540

Suspension and removal of trustees                                                                   541

426‑125. Suspension or removal of trustees.................................................. 541

426‑130. Commissioner to appoint acting trustee in cases of suspension or removal              543

426‑135. Terms and conditions of appointment of acting trustee................... 544

426‑140. Termination of appointment of acting trustee.................................. 544

426‑145. Resignation of acting trustee........................................................... 544

426‑150. Property vesting orders................................................................... 544

426‑155. Powers of acting trustee.................................................................. 545

426‑160. Commissioner may give directions to acting trustee........................ 545

426‑165. Property vested in acting trustee—former trustees’ obligations relating to books, identification of property and transfer of property........................................................................................... 546

Transfers between ancillary funds                                                                    547

426‑170. Ancillary funds must not provide funds to other ancillary funds.... 547

Part 5‑45—Application of taxation laws to certain entities                 548

Division 444—Obligations of entities on behalf of other entities              548

Guide to Division 444                                                                                            548

444‑1..... What this Division is about............................................................. 548

Subdivision 444‑A—Unincorporated associations and bodies and companies               548

444‑5..... Unincorporated associations and bodies......................................... 548

444‑10... Public officers of companies........................................................... 549

444‑15... Liability of directors and officers of a company.............................. 550

Subdivision 444‑B—Partnerships                                                                      550

444‑30... Partnerships.................................................................................... 550

Subdivision 444‑C—Superannuation funds                                                     551

444‑50... Superannuation funds..................................................................... 551

Subdivision 444‑D—Incapacitated entities                                                      552

444‑70... Representatives of incapacitated entities.......................................... 552

Subdivision 444‑E—Indirect tax specific entities                                          553

444‑80... GST joint ventures.......................................................................... 553

444‑85... Non‑profit sub‑entities.................................................................... 555

444‑90... GST groups.................................................................................... 556

Division 446—Local governing bodies                                                            560

Guide to Division                                                                                                    560

446‑1..... What this Division is about............................................................. 560

Operative provisions                                                                                             560

446‑5..... Requirements for unanimous resolutions by local governing bodies 560

Part 5‑100—Miscellaneous                                                                                    564

Division 850—Transactions exempt from application of taxation laws 564

Subdivision 850‑A—Declaration relating to security or intelligence agency 564

850‑100. Declaration relating to security or intelligence agency..................... 564

Notes                                                                                                                                           567


The Schedules

Section 2(1)            

First ScheduleAmendments of Acts

  

  

Note:

The amendments made by this Schedule are incorporated in the compilations on ComLaw.

Estate Duty Assessment Act 1914‑1950
[repealed by Act No. 118, 1999, Sch. 1]

Gift Duty Assessment Act 1941‑1950
[repealed by Act No. 118, 1999, Sch. 1]

Income Tax and Social Services Contribution Assessment Act 1936‑1952 [now cited as Income Tax Assessment Act 1936]

Officers’ Rights Declaration Act 1928‑1940
[repealed by Act No. 170, 1978, s. 44(1)]

Pay‑roll Tax Assessment Act 1941‑1942
[repealed by Act No. 101, 2006, Sch. 5]

Sales Tax Assessment Act (No. 1) 1930‑1942
[repealed by Act No. 101, 2006, Sch. 5]

Sales Tax Procedure Act 1934‑1940
[repealed by Act No. 101, 2006, Sch. 5]

Stevedoring Industry Charge Assessment Act 1947
[repealed by Act No. 118, 1999, Sch. 1]

War‑time (Company) Tax Assessment Act 1940‑1947
[repealed by Act No. 216, 1973, s. 5]

Wool Tax Assessment Act 1936‑1952
[repealed by Act No. 31, 1964, s. 4]

For access to the wording of the amendments made by this Schedule see Act No. 1, 1953.


 

Second ScheduleCitation of Acts amended

Section 2(2)            

  

  

 

First Column

Second Column

Gift Duty Assessment Act 1941‑1950

Gift Duty Assessment Act 1941‑1953
[repealed by Act No. 118, 1999, Sch. 1]

Officers’ Rights Declaration Act 1928‑1940

Officers’ Rights Declaration Act 1928‑1953
[repealed by Act No. 170, 1978, s. 44(1)]

Sales Tax Assessment Act (No. 1) 1930‑1942

Sales Tax Assessment Act (No. 1) 1930‑1953
repealed by Act No. 101, 2006, Sch. 5]

Sales Tax Procedure Act 1934‑1940

Sales Tax Procedure Act 1934‑1953
[repealed by Act No. 101, 2006, Sch. 5]

Stevedoring Industry Charge Assessment Act 1947

Stevedoring Industry Charge Assessment Act 1947‑1953
[repealed by Act No. 118, 1999, Sch. 1]

War‑time (Company) Tax Assessment Act 1940‑1947

War‑time (Company) Tax Assessment Act 1940‑1953
[repealed by Act No. 216, 1973, s. 5]

Wool Tax Assessment Act 1936‑1952

Wool Tax Assessment Act 1936‑1953
[repealed by Act No. 31, 1964, s. 4]


Schedule 1Collection and recovery of income tax and other liabilities

Note:       See section 3AA.

Chapter 2Collection, recovery and administration of income tax

Part 2‑1Introduction to the Pay as you go (PAYG) system

Division 6Guide 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 2‑5Pay as you go (PAYG) withholding

Division 10Guide to Part 2‑5

10‑1  What this Part is about

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

1

A payment of salary etc. to an employee

12‑35

2

A payment of remuneration to the director of a company

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

7

A *superannuation income stream or an annuity

12‑80

8

A *superannuation lump sum or a payment for termination of employment

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

14A

A trustee of a closely held trust distributing an amount from the trust income to a beneficiary, where the beneficiary does not quote its tax file number

12‑175

14B

A beneficiary of a closely held trust becoming presently entitled to income of the trust, where the beneficiary does not quote its tax file number

12‑180

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 11Preliminary matters

Table of sections

11‑1          Object of this Part

11‑5          Constructive payment

11‑1  Object of this Part

                   The object of this Part is to ensure the efficient collection of:

                     (a)  income tax; and

                     (b)  Medicare levy; 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.

11‑5  Constructive payment

             (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 12Payments from which amounts must be withheld

Table of Subdivisions

12‑A     General rules

12‑B      Payments for work and services

12‑C      Payments for retirement or because of termination of employment

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‑AGeneral rules

Table of sections

12‑1          General exceptions

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

12‑1  General exceptions

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, a payment for termination of employment 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 12‑175 or 12‑180 (Payment of income of closely held trust where TFN not quoted) or 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‑BPayments 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

12‑35  Payment to employee

                   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.

12‑50  Return to work payment

                   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.

Subdivision 12‑CPayments for retirement or because of termination of employment

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 payments for termination of employment

                   An entity must withhold an amount from any of the following payments it makes to an individual:

                     (a)  a *superannuation lump sum;

                     (b)  a payment that is an *employment termination payment or would be one except that it is received more than 12 months after termination of employment.

For exceptions, see section 12‑1.

12‑90  Unused leave payments

                   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‑DBenefit 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.

                    (ca)  *parental leave pay; or

                     (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‑EPayments 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 of income of closely held trust where TFN not quoted

12‑175      Trustee distributes income of closely held trust

12‑180      Beneficiary becomes presently entitled to income of closely held trust

12‑185      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.

Payment of income of closely held trust where TFN not quoted

12‑175  Trustee distributes income of closely held trust

Scope

             (1)  This section applies if:

                     (a)  the trustee of a trust makes a distribution to a beneficiary of the trust at a time (the distribution time) during an income year of the trust; and

                     (b)  some or all of the distribution is from the *ordinary income or *statutory income of the trust; and

                     (c)  the trust is:

                              (i)  a resident trust estate (within the meaning of subsection 95(2) of the Income Tax Assessment Act 1936) in relation to the income year; and

                             (ii)  a closely held trust (within the meaning of section 102UC of that Act, disregarding paragraphs (c), (d) and (e) of the definition of excluded trust in subsection (4) of that section); and

                            (iii)  not prescribed by the regulations for the purposes of this subparagraph; and

                     (d)  the beneficiary is:

                              (i)  an Australian resident; and

                             (ii)  not an *exempt entity; and

                            (iii)  not under a legal disability for the purposes of section 98 of that Act.

Trustee must withhold

             (2)  The trustee must withhold an amount from the distribution, if:

                     (a)  the beneficiary did not *quote the beneficiary’s *tax file number to the trustee before the distribution time; and

                     (b)  the trustee is not liable to pay tax under section 98 of the Income Tax Assessment Act 1936 in connection with the distribution; and

                     (c)  the trustee is not required to make a correct TB statement under Division 6D of Part III of that Act (about trustee beneficiary non‑disclosure tax) in connection with the distribution; and

                     (d)  family trust distribution tax is not payable under Schedule 2F to that Act in connection with the distribution.

Note 1:       If the trust is a unit trust, the trustee may be required to withhold under section 12‑140 in priority to this section: see section 12‑5.

Note 2:       The trustee commits an offence if the trustee fails to withhold an amount as required by this section: see section 16‑25.

Application of rest of Part

             (3)  If the distribution is not a payment, this Part applies as if the trustee paid the amount of the distribution to the beneficiary at the distribution time.

Trust income of earlier income years

             (4)  Subsections (2) and (3) do not apply to the distribution, to the extent that:

                     (a)  the beneficiary is presently entitled, for the purposes of Division 6 of Part III of the Income Tax Assessment Act 1936, to a share of the income of the trust of an earlier income year; and

                     (b)  the distribution is a distribution of some or all of that share.

Note:          The trustee may have been required to withhold from that share under section 12‑180.

12‑180  Beneficiary becomes presently entitled to income of closely held trust

Scope

             (1)  This section applies if:

                     (a)  at the end of an income year of a trust, a beneficiary of the trust is presently entitled, for the purposes of Division 6 of Part III of the Income Tax Assessment Act 1936, to a share of the income of the trust of that year; and

                     (b)  paragraph 12‑175(1)(c) in this Schedule applies to the trustee of the trust; and

                     (c)  paragraph 12‑175(1)(d) applies to the beneficiary.

Trustee must withhold

             (2)  The trustee must withhold an amount from that share of the *net income of the trust, if:

                     (a)  the beneficiary did not *quote the beneficiary’s *tax file number to the trustee before the end of the year; and

                     (b)  the trustee is not liable to pay tax in respect of that share under section 98 of the Income Tax Assessment Act 1936; and

                     (c)  the trustee is not required to make a correct TB statement about that share under Division 6D of Part III of that Act (about trustee beneficiary non‑disclosure tax); and

                     (d)  family trust distribution tax is not payable on that share of the income of the trust under Schedule 2F to that Act.

Note 1:       If the trust is a unit trust, the trustee may be required to withhold under section 12‑145 in priority to this section: see section 12‑5.

Note 2:       The trustee commits an offence if the trustee fails to withhold an amount as required by this section: see section 16‑25.

Application of rest of Part

             (3)  This Part (other than section 12‑175) applies as if the trustee had paid that share of the *net income of the trust to the beneficiary at the end of the income year.

Entitlements already paid

             (4)  Subsections (2) and (3) do not apply to that share of the *net income of the trust to the extent that the trustee distributed any of that share to the beneficiary during the income year.

Note:          The trustee may have been required to withhold from that distribution under section 12‑175.

Trusts that end during the year

             (5)  This section applies as if each reference to the end of an income year were a reference to the time occurring just before the trust ends, if the trust ends during the income year.

12‑185  Exception for payments below thresholds set by regulations

             (1)  Section 12‑175 or 12‑180 does not require an amount to be withheld if the payment (including the payment mentioned in subsection 12‑180(3)) 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.

Payment for a supply

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); or

                     (d)  is covered by section 12‑175 or 12‑180 (Payment of income of closely held trust where TFN not quoted); or

                     (e)  would be covered by section 12‑175 or 12‑180 if the other entity had not quoted as mentioned in paragraph 12‑175(2)(a) or 12‑180(2)(a); or

                      (f)  would be covered by section 12‑175 or 12‑180 apart from section 12‑185 (which is an exception to sections 12‑175 and 12‑180).

             (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‑FDividend, 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

Dividends

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.

Interest

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.

12‑255  Interest payment derived by lender in carrying on business through overseas permanent establishment

                   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.

Royalties

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.

General

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‑FADeparting 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‑FAAExcess 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‑FBPayments 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‑GPayments 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

Mining on Aboriginal land

12‑320  Mining payment

             (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.

Natural resources

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‑HDistributions of managed investment trust income

Guide to Subdivision 12‑H

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

12‑401      Trusts with wholesale membership

12‑402      Widely‑held requirements—ordinary case

12‑402A   Widely‑held requirements for registered MIT—special case for entities covered by subsection 12‑402(3)

12‑402B    Closely‑held restrictions

12‑403      Licensing requirements for unregistered MIS

12‑404      MIT participation interest

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

Operative provisions

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)  at the time the trustee of the trust makes the first *fund payment in relation to the income year, or at an earlier time in the income year:

                              (i)  the trustee of the trust was an Australian resident; or

                             (ii)  the central management and control of the trust was in Australia; and

                     (b)  the trust is not a trust covered by subsection (2) (trading trust etc.) in relation to the income year; and

                     (c)  a substantial proportion of the investment management activities carried out in relation to the trust in respect of all of the following assets of the trust are carried out in Australia throughout the income year:

                              (i)  assets that are situated in Australia at any time in the income year;

                             (ii)  assets that are *taxable Australian property at any time in the income year;

                            (iii)  assets that are *shares, units or interests listed for quotation in the official list of an *approved stock exchange in Australia at any time in the income year; and

                     (d)  at the time the payment is made, the trust is a managed investment scheme (within the meaning of section 9 of the Corporations Act 2001); and

                     (e)  at the time the payment is made:

                              (i)  the trust is covered by section 12‑401 (trusts with wholesale membership); or

                             (ii)  if the trust is not covered by section 12‑401—the trust is registered under section 601EB of the Corporations Act 2001; and

                      (f)  the trust satisfies, in relation to the income year:

                              (i)  if, at the time the payment is made, the trust is registered under section 601EB of the Corporations Act 2001 and is covered by section 12‑401—either or both of the widely‑held requirements in subsections 12‑402(1) and 12‑402A(1); or

                             (ii)  if, at the time the payment is made, the trust is so registered and is not covered by section 12‑401—either or both of the widely‑held requirements in subsections 12‑402(1A) and 12‑402A(1); or

                            (iii)  if, at the time the payment is made, the trust is not so registered and is covered by section 12‑401—the widely‑held requirements in subsection 12‑402(1); and

                     (g)  the trust satisfies the closely‑held restrictions in subsection 12‑402B(1) in relation to the income year; and

                     (h)  if the trust is covered by section 12‑401 at the time the payment is made—it satisfies the licensing requirements in section 12‑403 in relation to the income year.

Trading unit trust or other trust carrying on trading business etc. cannot be managed investment trust

             (2)  A trust is covered by this subsection in relation to an income year if:

                     (a)  in the case of a unit trust—the trust is a trading trust for the purposes of Division 6C in Part III of the Income Tax Assessment Act 1936 in relation to the income year; or

                     (b)  in any other case—the trust at any time in the income year:

                              (i)  carried on a trading business (within the meaning of that Division); or

                             (ii)  controlled, or was able to control, directly or indirectly, the affairs or operations of another person in respect of the carrying on by that other person of a trading business (within the meaning of that Division).

Crown entities, etc.

             (3)  For the purposes of paragraphs (1)(e) and (f), treat an entity as registered under section 601EB of the Corporations Act 2001 at the time the payment is made if at that time the trust is operated by:

                     (a)  an entity that would, but for subsection 5A(4) of that Act (about the Crown not being bound by Chapter 6CA or 7 of that Act), be required under that Act to be a financial services licensee (within the meaning of section 761A of that Act) whose licence would cover operating such a managed investment scheme; or

                     (b)  an entity that:

                              (i)  is a *wholly‑owned subsidiary of an entity of a kind mentioned in paragraph (a); and

                             (ii)  would, but for any instrument issued by ASIC under that Act that has effect in relation to the entity and operation of the scheme mentioned in paragraph 12‑400(1)(d), be required under that Act to be a financial services licensee (within the meaning of section 761A of that Act) whose licence would cover operating such a managed investment scheme.

Start‑up and wind‑down phases

             (4)  Treat the requirements in paragraphs (1)(f) and (g) as being satisfied if:

                     (a)  the trust is created during the period:

                              (i)  starting 6 months before the start of the income year; and

                             (ii)  ending at the end of the income year; or

                     (b)  the trust ceases to exist during the income year, and was a *managed investment trust (disregarding paragraph (a)) in relation to the previous income year.

12‑401  Trusts with wholesale membership

                   A trust is covered by this section at a time if, at that time:

                     (a)  the trust is not required to be registered in accordance with section 601ED of the Corporations Act 2001 (whether or not it is actually so registered) because of subsection 601ED(2) of that Act (no product disclosure statement required) or because it is operated or managed by an entity covered by subsection 12‑403(2) (Crown entities); and

                     (b)  the total number of entities that had become a *member of the trust because a financial product or a financial service was provided to, or acquired by, the entity as a retail client (within the meaning of sections 761G and 761GA of the Corporations Act 2001) is no more than 20; and

                     (c)  the entities mentioned in paragraph (b) have a total *MIT participation interest in the trust of no more than 10%.

12‑402  Widely‑held requirements—ordinary case

             (1)  The trust satisfies the requirements in this subsection in relation to the income year if, at the time the payment mentioned in paragraph 12‑400(1)(a) is made, the trust has at least 25 *members.

          (1A)  The trust satisfies the requirements in this subsection in relation to the income year if, at the time the payment mentioned in paragraph 12‑400(1)(a) 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).

             (2)  For the purposes of subsection (1) and paragraph (1A)(b), determine the number of *members of the trust as follows:

                     (a)  first, by applying the rules in subsection (4), identify:

                              (i)  the members of the trust that are not entities covered by subsection (3); and

                             (ii)  the members of the trust that are entities covered by subsection (3);

                     (b)  next, work out the number of members mentioned in subparagraph (a)(i);

                     (c)  next:

                              (i)  work out the *MIT participation interest in the trust of each entity mentioned in subparagraph (a)(ii); and

                             (ii)  for each of those entities, multiply the total of its MIT participation interest in the trust by 50 and round the result upwards to the nearest whole number; and

                            (iii)  work out the total of the results of subparagraph (ii) for all of those entities;

                     (d)  next, work out the total of the results of paragraphs (b) and (c).

             (3)  This subsection covers the following kinds of entity:

                     (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 *pooled superannuation trust that has at least one member that is a complying superannuation fund that has at least 50 members;

                     (d)  a *managed investment trust in relation to the income year;

                     (e)  an entity that is recognised under a *foreign law as being used for collective investment by means of pooling the contributions of at least 50 members of the entity as consideration to acquire rights to benefits produced by the entity, if the members of the entity do not have day‑to‑day control over the operation of the entity;

                      (f)  an entity, the principal purpose of which is to fund pensions (including disability and similar benefits) for the citizens or other contributors of a foreign country, if:

                              (i)  the entity is a fund established by an *exempt foreign government agency; or

                             (ii)  the entity is established under a foreign law for an exempt foreign government agency; or

                            (iii)  the entity is a *wholly‑owned subsidiary of an entity mentioned in subparagraph (i) or (ii);

                     (g)  an investment entity that satisfies all of these requirements:

                              (i)  the entity is wholly‑owned by one or more *foreign government agencies, or is a wholly‑owned subsidiary of one or more foreign government agencies;

                             (ii)  the entity is established using only the public money or public property of the foreign government concerned;

                            (iii)  all economic benefits obtained by the entity have passed, or are expected to pass, to the foreign government concerned;

                     (h)  an entity established and wholly‑owned by an *Australian government agency, if the capital of the entity, and returns from the investment of that capital, are used for the primary purpose of meeting statutory government liabilities or obligations (such as superannuation liabilities and liabilities arising from compensation or workcover claims);

                      (i)  an entity of a kind similar to an entity mentioned in the preceding paragraphs of this subsection as specified in the regulations.

             (4)  The rules are as follows:

                     (a)  if an entity that is not a trust holds interests in the trust indirectly, through a *chain of trusts:

                              (i)  treat the entity as a member of the trust; and

                             (ii)  do not treat a trust in the chain of trusts as a member of the trust;

                     (b)  do not treat an object of the trust as a member of the trust;

                   (ba)  if the trust is mentioned in subparagraph 12‑400(1)(e)(i) (trusts with wholesale membership)—do not treat an individual as a member of the trust (other than an individual who became a member of the trust because a financial product or a financial service was provided to, or acquired by, the individual as a wholesale client (within the meaning of section 761G of the Corporations Act 2001));

                     (c)  the rules in subsection (6).

             (5)  For the purposes of paragraph (4)(a), treat an entity covered by subsection (3) as an entity that is not a trust.

             (6)  The rules are as follows:

                     (a)  treat the following entities as together being one entity:

                              (i)  an individual;

                             (ii)  each of his or her relatives;

                            (iii)  each entity acting in the capacity of nominee of an individual mentioned in subparagraph (i) or (ii);

                     (b)  treat the following entities as together being one entity (the notional entity):

                              (i)  an entity that is not an individual;

                             (ii)  each entity acting in the capacity of nominee of the entity mentioned in subparagraph (i).

             (7)  For the purposes of subsection (4), if the entity mentioned in subparagraph (6)(b)(i) is an entity covered by subsection (3), treat the notional entity as an entity covered by subsection (3).

12‑402A  Widely‑held requirements for registered MIT—special case for entities covered by subsection 12‑402(3)

             (1)  The trust satisfies the requirements in this subsection in relation to the income year if:

                     (a)  one or more entities covered by subsection 12‑402(3) have a total *MIT participation interest in the trust of more than 25% at the time the payment mentioned in paragraph 12‑400(1)(a) is made; and

                     (b)  at no time in the income year does an entity (other than an entity covered by subsection 12‑402(3)) have a MIT participation interest in the trust of more than 60%.

             (2)  For the purposes of paragraphs (1)(a) and (b):

                     (a)  if:

                              (i)  an entity covered by subsection 12‑402(3) has a *MIT participation interest (the first interest) in the trust; and

                             (ii)  another entity covered by subsection 12‑402(3) also has a MIT participation interest (the second interest) in the trust;

                            disregard the second interest to the extent that it arises through the existence of the first interest; and

                     (b)  if an entity that is not a trust has a MIT participation interest in the trust because it holds interests in the trust indirectly, through a *chain of trusts—do not treat a trust in the chain of trusts as having a MIT participation interest in the trust.

             (3)  For the purposes of paragraph (2)(b), treat an entity covered by subsection 12‑402(3) as an entity that is not a trust.

             (4)  For the purposes of paragraphs (1)(a) and (b), apply the rules in subsection 12‑402(6).

12‑402B  Closely‑held restrictions

             (1)  The trust satisfies the requirements in this subsection in relation to the income year unless, at any time in the income year, any of the following situations exist:

                     (a)  for a trust mentioned in subparagraph 12‑400(1)(e)(i) (trusts with wholesale membership)—10 or fewer persons have a total *MIT participation interest in the trust of 75% or more;

                     (b)  if paragraph (a) does not apply—20 or fewer persons have a total MIT participation interest in the trust of 75% or more;

                     (c)  a foreign resident individual has a MIT participation interest in the trust of 10% or more.

             (2)  For the purposes of paragraphs (1)(a) and (b):

                     (a)  if an entity covered by subsection 12‑402(3) has a *MIT participation interest in the trust—treat that entity as not having a MIT participation interest in the trust; and

                     (b)  if an entity that is not a trust has a MIT participation interest in the trust because it holds interests in the trust indirectly, through a *chain of trusts:

                              (i)  if the entity is covered by subsection 12‑402(3)—do not treat it as having a MIT participation interest in the trust; and

                             (ii)  do not treat a trust in the chain of trusts as having a MIT participation interest in the trust.

             (3)  For the purposes of paragraph (2)(b), treat an entity covered by subsection 12‑402(3) as an entity that is not a trust.

             (4)  For the purposes of paragraphs (1)(a) and (b), apply the rules in subsection 12‑402(6).

12‑403  Licensing requirements for unregistered MIS

             (1)  The trust satisfies the requirements in this section in relation to the income year if, at the time the payment mentioned in paragraph 12‑400(1)(a) is made (the time of the first fund payment for the income year):

                     (a)  the trust is operated or managed by:

                              (i)  a financial services licensee (within the meaning of section 761A of the Corporations Act 2001) holding an Australian financial services licence whose licence covers it providing financial services (within the meaning of section 766A of that Act) to wholesale clients (within the meaning of section 761G of that Act); or

                             (ii)  an authorised representative (within the meaning of section 761A of that Act) of such a financial services licensee; or

                     (b)  the trust is operated or managed by an entity covered by subsection (2); or

                     (c)  the trust is operated or managed by an entity that:

                              (i)  is a *wholly‑owned subsidiary of an entity covered by subsection (2); and

                             (ii)  is an entity covered by subsection (3).

             (2)  An entity is covered by this subsection if it would, but for subsection 5A(4) of that Act (about the Crown not being bound by Chapter 6CA or 7 of that Act), be required under the Corporations Act 2001 to be a financial services licensee (within the meaning of section 761A of that Act).

             (3)  An entity is covered by this subsection if it would, but for any instrument issued by ASIC under that Act that has effect in relation to the entity and the operation of the scheme mentioned in paragraph 12‑400(1)(d), be required under the Corporations Act 2001 to be a financial services licensee (within the meaning of section 761A of that Act).

12‑404  MIT participation interest

             (1)  An entity has a MIT participation interest in a trust if the entity, directly or indirectly:

                     (a)  holds, or has the right to *acquire, interests representing a percentage of the value of the interests in the trust; or

                     (b)  has the control of, or the ability to control, a percentage of the rights attaching to *membership interests in the trust; or

                     (c)  has the right to receive a percentage of any distribution of income that the trust may make.

             (2)  The MIT participation interest of the entity in the trust is the greatest of the percentages mentioned in paragraphs (1)(a), (b) and (c).

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.

12‑420  Agency rules

             (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 13Alienated personal services payments

Table of sections

13‑1          Object of this Division

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

13‑1  Object of this Division

                   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 if:

                     (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 14Non‑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‑ANon‑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 an *ESS interest *under an employee share scheme to which Subdivision 83A‑B or 83A‑C of the Income Tax Assessment Act 1997 applies.

14‑10  Dividend, interest or royalty received, for a foreign resident, in the form of a non‑cash benefit

                   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‑BAccruing 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.

Subdivision 14‑CShares and rights under employee share schemes

Table of sections

14‑155      Liability for TFN withholding tax (ESS)

14‑160      Employer may give individual tax file numbers to provider

14‑165      Provider may recover TFN withholding tax (ESS) from individual

14‑170      Application of rules in Division 18

14‑175      Overpayment of TFN withholding tax (ESS)

14‑180      Application of certain provisions of Division 83A of the Income Tax Assessment Act 1997

14‑155  Liability for TFN withholding tax (ESS)

             (1)  Tax (TFN withholding tax (ESS)) imposed by the Income Tax (TFN Withholding Tax (ESS)) Act 2009 is payable if:

                     (a)  a company (the provider) provides one or more *ESS interests to an individual under an *employee share scheme; and

                     (b)  as a result, an amount is included in the individual’s assessable income under Division 83A of the Income Tax Assessment Act 1997 for an income year (taking into account subsection (2) of this section); and

                     (c)  the individual has quoted neither of the following to the provider before the end of the income year:

                              (i)  if the individual acquired the interests in relation to any services provided to the provider, or to a *subsidiary of the provider, in the course or furtherance of an *enterprise *carried on by the individual—the individual’s *ABN;

                             (ii)  in any case—the individual’s *tax file number.

             (2)  For the purposes of paragraph (1)(b), disregard section 83A‑35 of the Income Tax Assessment Act 1997 (about reducing the amount included in the individual’s assessable income).

Note:          Disregard the 30 day rule in subsections 83A‑115(3) and 83A‑120(3) of the Income Tax Assessment Act 1997 for the purposes of this Subdivision: see subsection 392‑5(6) in this Schedule.

             (3)  The *TFN withholding tax (ESS) is payable by the provider.

             (4)  The *TFN withholding tax (ESS) is due and payable at the end of 21 days after the end of the income year referred to in paragraph (1)(b).

Note 1:       When it is due and payable, the TFN withholding tax (ESS) is payable to the Commissioner: see paragraph 255‑5(1)(b).

Note 2:       The provider must pay the TFN withholding tax (ESS) to the Commissioner in accordance with Subdivision 16‑B: see subsection 16‑70(4). If any of it remains unpaid, the provider is liable to pay general interest charge: see section 16‑80.

Note 3:       The Commissioner may defer the time at which TFN withholding tax (ESS) becomes due and payable: see section 255‑10.

14‑160  Employer may give individual tax file numbers to provider

             (1)  The individual is taken to have authorised a *subsidiary (the employer) of the provider to inform the provider of the individual’s *tax file number if:

                     (a)  the individual has made a *TFN declaration in relation to the employer; and

                     (b)  some or all of the *ESS interests mentioned in paragraph 14‑155(1)(a) were provided to the individual in relation to the individual’s employment by the employer.

             (2)  If the employer does so, the individual is taken, for the purposes of this Subdivision and Division 392 (Employee share scheme reporting), to have quoted his or her *tax file number to the provider.

14‑165  Provider may recover TFN withholding tax (ESS) from individual

             (1)  The provider may recover from the individual as a debt any of the *TFN withholding tax (ESS) the provider pays.

             (2)  The provider is entitled to set off an amount that the provider can recover from the individual under this section against a debt due by the provider to the individual.

14‑170  Application of rules in Division 18

                   These provisions:

                     (a)  subsection 18‑15(1) (about credits for amounts withheld from withholding payments); and

                     (b)  sections 18‑65 and 18‑70 (about refunds of amounts withheld in error);

apply as if any of the *TFN withholding tax (ESS) that has been paid were an amount withheld under section 12‑35 from a *withholding payment made to the individual and covered by that section.

14‑175  Overpayment of TFN withholding tax (ESS)

                   If *TFN withholding tax (ESS) has been overpaid:

                     (a)  the Commissioner must refund the amount overpaid; and

                     (b)  the individual is not entitled to a credit under section 18‑15 in respect of the amount overpaid.

14‑180  Application of certain provisions of Division 83A of the Income Tax Assessment Act 1997

                   The following provisions of the Income Tax Assessment Act 1997 have effect for the purposes of this Subdivision in the same way as they have for the purposes of Division 83A of that Act:

                     (a)  section 83A‑130 (about takeovers and restructures);

                     (b)  section 83A‑305 (about associates);

                     (c)  section 83A‑320 (about trusts);

                     (d)  section 83A‑325 (about relationships similar to employment);

                     (e)  section 83A‑335 (about stapled securities);

                      (f)  section 83A‑340 (about indeterminate rights).


 

Division 15Working 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

Guide to Division 15

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‑AWorking out how much to withhold

Table of sections

15‑10        How much to withhold

15‑15        Variation of amounts required to be withheld

15‑10  How much to withhold

             (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, 12‑145, 12‑175 or 12‑180 or Subdivision 12‑H). If the Commissioner does so, the amount is varied accordingly.

Note 1:       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).

Note 2:       Sections 12‑175 and 12‑180 are about a payment of the income of a closely held trust to a beneficiary, where the beneficiary does not quote the beneficiary’s tax file number.

Note 3:       Section 12‑145 is about an investor becoming presently entitled to income of a unit trust.

Note 4:       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‑BWithholding 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), (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;

                    (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‑CDeclarations

Table of sections

15‑50        Declarations

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), (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 16Payer’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

Guide to Division 16

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‑ATo 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.

When to withhold

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 1A:    A trustee of a closely held trust is required to withhold an amount under section 12‑180 when a beneficiary is presently entitled to unpaid income of the 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.

Penalties for not withholding

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‑BTo 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.

             (4)  An entity that must pay an amount to the Commissioner under Subdivision 14‑C 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 (other than section 12‑175 or 12‑180) 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 (other than section 12‑175 or 12‑180) 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 (other than section 12‑175 or 12‑180); 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 (other than section 12‑175 or 12‑180) 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 (other than section 12‑175 or 12‑180) 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

Payment of income of closely held trust

             (5)  A trustee must pay to the Commissioner an amount the trustee withholds under section 12‑175 or 12‑180 from a payment made during an income year. The trustee must do so:

                     (a)  by the end of the 28th day of the next month following the day by which the trustee was required to give to the Commissioner a report under subsection 16‑152(1) for the income year; or

                     (b)  within a longer period allowed by the Commissioner.

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), (3) or (4) 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‑BATo 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

Registration of withholders

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.

Branch registration

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‑CTo provide information

Table of sections

To the Commissioner

16‑150      Commissioner must be notified of amounts

16‑152      Annual reports—Withholding payments covered by section 12‑175

16‑153      Annual reports—other payments

To recipients of withholding payments

16‑155      Annual payment summary

16‑156      Annual payment summary for sections 12‑175 and 12‑180

16‑157      Payment summary for Subdivision 12‑H

16‑160      Part‑year payment summary

16‑165      Payment summaries for superannuation lump sums and payments for termination of employment

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

To the Commissioner

16‑150  Commissioner must be notified of amounts

                   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.

16‑152  Annual reports—Withholding payments covered by section 12‑175

Reports about withholding payments

             (1)  A trustee must give a report to the Commissioner in the *approved form if the trustee made any *withholding payments covered by section 12‑175 or 12‑180 (about payments from the income of certain closely held trusts) during an income year.

             (2)  The trustee must give the report under subsection (1) to the Commissioner:

                     (a)  not later than 3 months after the end of the income year; or

                     (b)  within such further period (if any) as the Commissioner allows.

Reports about trust distributions

             (3)  A trustee must give a report to the Commissioner in the *approved form if the trustee would be taken to have made any *withholding payments covered by section 12‑175 or 12‑180 during an income year if the relevant beneficiary had not *quoted the beneficiary’s *tax file number as mentioned in paragraph 12‑175(2)(a) or 12‑180(2)(a).

Note:          The effect of subsection (3) is that the trustee must report amounts distributed to beneficiaries even if the trustee was not required to withhold from those distributions.

             (4)  The trustee must give the report under subsection (3) to the Commissioner:

                     (a)  by the end of the day on which the trustee lodges the trust’s *income tax return for the income year; or

                     (b)  within such further period (if any) as the Commissioner allows.

Miscellaneous

             (5)  Subsections 16‑153(5), (6) and (7) apply to this section in the same way as they apply to section 16‑153.

16‑153  Annual reports—other payments

             (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

16‑155  Annual payment summary

             (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, 12‑175, 12‑180, 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.

Paid parental leave paid in error

             (3)  Despite subsection (2), the *payment summary must not cover a *withholding payment if:

                     (a)  the withholding payment is a payment of an amount purported to have been paid by way of *parental leave pay; and

                     (b)  the amount was not lawfully so payable.

             (4)  The payer must, within 28 days of becoming aware that the *payment summary covers a *withholding payment to which subsection (3) applies:

                     (a)  give the recipient an amended payment summary that does not cover the withholding payment; or

                     (b)  give the recipient notice in the *approved form; or

                     (c)  give the Secretary (within the meaning of the Paid Parental Leave Act 2010) notice in writing that the payer does not intend to give the recipient an amended payment summary or notice under this subsection.

16‑156  Annual payment summary for sections 12‑175 and 12‑180

             (1)  A trustee must give a *payment summary to a beneficiary of the trust, if the trustee made any *withholding payments covered by section 12‑175 or 12‑180 to the beneficiary during the income year.

             (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 day by which the trustee was required to give the Commissioner a report under subsection 16‑152(1) for the income year; or

                             (ii)  within a longer period allowed by the Commissioner.

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.

             (3)  Despite subsection (1), the *payment summary must not cover a *withholding payment if:

                     (a)  the withholding payment is a payment of an amount purported to have been paid by way of *parental leave pay; and

                     (b)  at the time the recipient asks for the payment summary, the payer is aware that the amount was not lawfully so payable.

16‑165  Payment summaries for superannuation lump sums and payments for termination of employment

             (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)  a payment that is an *employment termination payment or would be one except that it is received more than 12 months after termination of employment, 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 section 12‑175 or 12‑180 or 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.

    (1AAA)  A payment summary relating to section 12‑175 or 12‑180 is a statement that:

                     (a)  names the trustee and the beneficiary; and

                     (b)  states the total of the *withholding payments (if any) that it covers, and the total of the *amounts withheld by the trustee from those withholding payments; and

                     (c)  specifies the income year of the trust to which it relates; and

                     (d)  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, 16‑156, 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), (1AAA), (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, 16‑156, 16‑157, 16‑160, 16‑165, 16‑166 or 16‑167, or subsection 16‑170(1), (1AAA), (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 that has been, is, or will be contributed in respect of the income year:

                     (a)  by an employer of the individual, or an *associate of the employer, for the individual’s benefit; 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 was, is or will be 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.

             (5)  For the purposes of paragraph (1)(c), treat the individual as neither having, nor being able reasonably to be expected to have, the capacity to influence the size of the amount if:

                     (a)  the employer or *associate is required to contribute the amount by:

                              (i)  an *industrial instrument; or

                             (ii)  the rules of a *superannuation fund; and

                     (b)  the individual does not and did not have, and is not able reasonably to be expected to have or have had, the capacity to influence the content of that instrument or those rules, to the extent that the instrument or rules relate to:

                              (i)  the requirement to contribute the amount; or

                             (ii)  the size of the amount.

Subdivision 16‑DAdditional 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 18Recipient’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‑ACrediting withheld amounts against liability for income tax, withholding tax or mining withholding tax

Guide to Subdivision 18‑A

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

General exception

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

18‑45  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‑BRefund 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)  either:

                              (i)  the amount was so withheld, or paid to the Commissioner, in error; or

                             (ii)  in the case of an amount withheld from a payment of an amount purported to have been paid by way of *parental leave pay—the amount paid was not lawfully so payable; and

                     (c)  either:

                              (i)  the payer becomes aware of the matter mentioned in paragraph (b); or

                             (ii)  the recipient applies to the payer for the refund;

                            before the end of the *financial year 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 (Payments for retirement or because of termination of employment);

                            (iii)  Subdivision 12‑D (benefits and compensation payments);

                            (iv)  section 12‑140 or 12‑145 (recipient does not quote tax file number or ABN);

                             (v)  section 12‑175 or 12‑180 (Payment of income of closely held trust where TFN not quoted); and

                     (e)  when the application for the refund is made, or when the payer otherwise becomes aware of the matter mentioned in paragraph (1)(b) of this section, 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 matter mentioned in paragraph (1)(b) (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)  either:

                              (i)  the amount was so withheld, or paid to the Commissioner, in error; or

                             (ii)  in the case of an amount withheld from a payment of an amount purported to have been paid by way of *parental leave—the amount paid was not lawfully so payable; and

                     (c)  section 18‑65 does not apply because the payer did not become aware of the matter mentioned in paragraph (b), 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 matter mentioned in paragraph (1)(b); 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 *amount withheld from a *withholding payment covered by section 12‑140 or 12‑145 that was made to that entity if:

                     (a)  the entity applies in writing for the refund; and

                     (b)  the Commissioner is satisfied that the entity was entitled to give *the investment body a declaration under Division 5 of Part VA of the Income Tax Assessment Act 1936 in relation to the *Part VA investment in respect of which the withholding payment was made, but did not do so; and

                     (c)  the Commissioner is also satisfied it is fair and reasonable to make the refund, having regard to the purposes of this Part and any other matters that the Commissioner considers appropriate.

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 18‑CRecipient’s obligations

18‑100  Obligation to keep payment summary

             (1)  An entity that is given a *payment summary and a copy of it in any financial year under this Part must retain the copy for:

                     (a)  5 years after the end of that financial year; or

                     (b)  a shorter period determined by the Commissioner in writing for the entity; or

                     (c)  a shorter period determined by the Commissioner by legislative instrument for a class of entities that includes the entity.

       (1AA)  A determination under paragraph (1)(c) may specify different periods for different classes of entities.

          (1A)  An offence under subsection (1) is an offence of strict liability.

Note:          For strict liability, see section 6.1 of the Criminal Code.


 

Division 20Other matters

Table of Subdivisions

20‑B      Offences

20‑D     Review of decisions

Subdivision 20‑BOffences

Table of sections

20‑35        Offences

20‑40        Joining of charges

20‑45        Offences that would otherwise be committed by a partnership or unincorporated company

20‑35  Offences

             (1)  A person must not:

                     (a)  present a document issued by the Commissioner that specifies a person (the specified person); and

                     (b)  falsely pretend to be the specified person with the intention of obtaining under this Part a credit for, or a payment of, an *amount withheld from a *withholding payment.

             (2)  A person must not attempt to obtain for the person a credit under this Part for an *amount withheld from a *withholding payment if:

                     (a)  the payment is not covered by section 12‑215, 12‑250, 12‑285 or 12‑317, or subsection 12‑390(4), and was made to another person; or

                     (b)  the payment is covered by section 12‑215, 12‑250, 12‑285 or 12‑317, or subsection 12‑390(4), and the person is not the foreign resident in respect of which all or a part of the payment is received as mentioned in that provision.

             (3)  A person must not, with the intention of obtaining a credit, a payment or any other benefit, present:

                     (a)  a copy of a *payment summary (except one relating to Subdivision 12‑H); or

                     (b)  a document purporting to be a copy of such a payment summary;

which is not a copy duly given to the person.

Penalty:  60 penalty units, or imprisonment for 12 months, or both.

Note:          See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

             (4)  A person must not, with the intention of obtaining a credit, a payment or any other benefit, present:

                     (a)  a *payment summary relating to Subdivision 12‑H, or a copy of such a payment summary; or

                     (b)  a document purporting to be such a payment summary or a copy of such a payment summary;

which is not a payment summary, or a copy of a payment summary, duly given to the person.

Penalty:  60 penalty units, or imprisonment for 12 months, or both.

Note:          See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

20‑40  Joining of charges

             (1)  Charges against the same person for a number of offences against this Part may be joined in one complaint, information or summons if those charges:

                     (a)  are founded on the same facts; or

                     (b)  form a series of offences of the same or a similar character; or

                     (c)  are part of a series of offences of the same or similar character.

             (2)  Particulars of each offence charged must be set out in a separate paragraph if 2 or more of the charges are included in the same complaint, information or summons.

             (3)  If the charges are joined, the charges must be tried together unless the court:

                     (a)  considers it just that any of the charges should be tried separately; and

                     (b)  makes an order to that effect.

             (4)  If a person is convicted of 2 or more of the offences:

                     (a)  the court may impose one penalty for both or all of those offences; but

                     (b)  the penalty must not exceed the sum of the maximum penalties that could be imposed in respect of each offence separately.

20‑45  Offences that would otherwise be committed by a partnership or unincorporated company

             (1)  An offence against this Part that would otherwise be committed by a partnership is taken to have been committed by each partner who:

                     (a)  aided, abetted, counselled or procured the relevant act or omission; or

                     (b)  was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly, and whether by any act or omission of the partner).

             (2)  An offence against this Part that would otherwise be committed by a company that is not incorporated is taken to have been committed by each member of the company’s committee of management who:

                     (a)  aided, abetted, counselled or procured the relevant act or omission; or

                     (b)  was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly, and whether by any act or omission of the member).

Subdivision 20‑DReview of decisions

20‑80  Reviewable decisions

                   A person who is dissatisfied with any of the following decisions of the Commissioner may object against the decision in the manner set out in Part IVC.

 

Reviewable decisions

Item

Description

1A

Decision not to grant an exemption under subsection 12‑319(1) from withholding obligations in relation to sections 12‑315 and 12‑317

1

Decision not to give a certificate under subsection 12‑335(1) exempting an entity from notifying the Commissioner about a natural resource payment

5

Decision to revoke a certificate under subsection 12‑335(3)

10

Decision to vary a certificate under subsection 12‑335(3)

25

Refusal to determine under subsection 16‑110(1) that a large withholder is a *medium withholder or a *small withholder for a particular month or particular months

30

Refusal to determine under subsection 16‑110(1) that a medium withholder is a small withholder for a particular month or particular months

35

Decision to revoke a determination made under subsection 16‑110(1)

40

Decision to vary a determination made under subsection 16‑110(1) for a particular month or particular months

45

Determination under subsection 16‑115(1) that a small withholder is a medium withholder or a large withholder for a particular month or particular months

50

Determination under subsection 16‑115(1) that a medium withholder is a large withholder

55

Decision not to revoke a determination made under subsection 16‑115(1)

60

Decision not to vary a determination made under subsection 16‑115(1) for a particular month or particular months

65

Decision not to refund an amount under section 18‑70

70

Decision not to refund an amount under section 18‑80

Note:          Division 298 also provides review rights about remission of administrative penalties.


 

Division 21Entitlements relating to insolvent ADIs and general insurers

Table of Subdivisions

             Guide to Division 21

21‑A     Treatment of some payments by APRA

Guide to Division 21

21‑1  What this Division is about

This Part applies in relation to a payment by APRA under:

               (a)     Division 2AA of Part II of the Banking Act 1959 applying in relation to an account with an ADI; or

              (b)     Part VC of the Insurance Act 1973 applying in relation to a general insurance policy issued by a general insurance company;

in a way corresponding to the way this Part would have applied if the payment had been made by the ADI or company in connection with the account or policy.

Subdivision 21‑ATreatment of some payments by APRA

Table of sections

21‑5          APRA treated like ADI or general insurance company

21‑5  APRA treated like ADI or general insurance company

             (1)  This section applies if:

                     (a)  an entity’s entitlement under Division 2AA of Part II of the Banking Act 1959 to be paid an amount by *APRA in connection with the entity’s account with an *ADI is met wholly or partly; or

                     (b)  an entity’s entitlement under Part VC of the Insurance Act 1973 to be paid an amount in connection with a *general insurance policy issued by a *general insurance company is met wholly or partly.

Note 1:       Division 2AA of Part II of the Banking Act 1959 entitles entities that have certain accounts with certain insolvent ADIs to be paid amounts by APRA worked out by reference to the balance of those accounts.

Note 2:       Part VC of the Insurance Act 1973 entitles entities with valid claims against certain insolvent general insurance companies under certain general insurance policies issued by those companies to be paid amounts by APRA.

             (2)  This Part applies in relation to *APRA and the meeting of the entitlement in a way corresponding to the way in which this Part would have applied in relation to the *ADI or *general insurance company doing, in connection with the account or policy, whatever was done in meeting the entitlement.

Example:    APRA (or APRA’s agent or delegate) pays an entity an amount of the entity’s entitlement relating to an account with an ADI. This Part applies in relation to APRA and the payment in a way corresponding to the way in which this Part would have applied in relation to the ADI had the ADI made a payment at that time of that amount under the arrangements for keeping the account.


Part 2‑10Pay as you go (PAYG) instalments

Division 45Instalment payments

Table of Subdivisions

             Guide to Division 45

45‑A     Basic rules

45‑B      When instalments are due

45‑C      Working out instalment amounts

45‑D     Quarterly payers

45‑E      Annual payers

45‑F      Varying the instalment rate for quarterly payers who pay on the basis of instalment income

45‑G     General interest charge payable in certain cases if instalments are too low

45‑H     Partnership income

45‑I       Trust income included in instalment income of beneficiary

45‑J       How Commissioner works out your instalment rate and notional tax

45‑K     How Commissioner works out your benchmark instalment rate and benchmark tax

45‑L      How Commissioner works out amount of quarterly instalment on basis of GDP‑adjusted notional tax

45‑M     How amount of quarterly instalment is worked out on basis of your estimate of your benchmark tax

45‑N     How this Part applies to the trustee of a trust

45‑P      Anti‑avoidance rules

45‑Q     General rules for consolidated groups

45‑R      Special rules for consolidated groups

45‑S      MEC groups


Guide to Division 45

45‑1  What this Division is about

If you have business or investment income, you must pay instalments towards your income tax liability. However, you do not have to do so unless the Commissioner has given you an instalment rate. Generally, instalments are payable for each quarter of your income year.

Your instalments may be based on your previous year’s income tax liability and notified to you by the Commissioner, or on your estimate of your income tax liability for the current income year. (In this case, you are a quarterly payer who pays on the basis of GDP adjusted notional tax). Generally, four quarterly instalments are payable annually on this basis, but you may only be required to pay two.

If you are not eligible to pay instalments on that basis, or if you are so eligible but choose not to do so, you must work out the amount of your quarterly instalment by multiplying your instalment income for an instalment quarter by the rate the Commissioner gave you, or by a rate you choose yourself. (In this case, you are a quarterly payer who pays on the basis of instalment income).

If you are not required to be registered for GST purposes, you may be able to choose to pay an annual instalment after the end of the income year. (In this case, you are an annual payer).

The amount of annual instalment can be your instalment income for the income year multiplied by the rate the Commissioner gave you, or an amount based on your previous year’s income tax liability and notified to you by the Commissioner, or your own estimate of your income tax liability for the income year.

Subdivision 45‑ABasic rules

Table of sections

45‑5          Object of this Part

45‑10        Application of Part

45‑15        Liability for instalments

45‑20        Information to be given to the Commissioner by certain payers

45‑25        Penalty for failure to notify Commissioner

45‑30        Credit for instalments payable

45‑5  Object of this Part

             (1)  The object of this Part is to ensure the efficient collection of:

                     (a)  income tax; and

                     (b)  Medicare levy; and

                    (ca)  amounts of liabilities to the Commonwealth under Chapter 4 of the Higher Education Support Act 2003; and

                     (d)  amounts of liabilities to the Commonwealth under Part 2B.3 of the Social Security Act 1991; and

                     (e)  amounts of liabilities to the Commonwealth under Division 6 of Part 4A of the Student Assistance Act 1973;

through the application of the principles set out in the rest of this section.

             (2)  As you earn *instalment income, you pay instalments after the end of each *instalment quarter worked out on the basis of your instalment income for that quarter if you are required or choose to work out your instalment on this basis. However, you may be able to pay an amount notified by the Commissioner. (There are exceptions to this).

             (3)  The total of your instalments for an income year is as close as possible to the total of your liabilities for the income year that are covered by subsection (1), except so far as the amounts of those liabilities are attributable to a *net capital gain. (The exception does not apply to the entities listed in subsections 45‑120(2) and (2A) or the net capital gains specified in subsection 45‑120(2B).)

             (4)  Consequently, the additional amounts you have to pay to discharge those liabilities, after an assessment of your income tax for the income year is made, are as low as possible.

             (5)  If you are a *quarterly payer who pays on the basis of instalment income, the amount of each of your instalments for an income year is the same proportion (as nearly as possible, subject to the principles in subsections (3) and (4)) of the total of those instalments as your *instalment income for that *instalment quarter is of your total instalment income for the income year.

             (6)  When instalments are payable, and how their amount is calculated, are the same for different kinds of entities, except as expressly provided.

Note:          Subdivision 45‑P penalises an entity whose tax position, so far as it relates to PAYG instalments and related matters, is altered by a scheme that is inconsistent with the object of this Part.

45‑10  Application of Part

                   This Part applies to individuals, companies, and the entities listed in items 4 to 10, and 12 and 13, of the table in section 9‑1 of the Income Tax Assessment Act 1997 (which lists the entities that must pay income tax).

Note 1:       Section 45‑450 provides for how this Part applies to a trustee covered by any of items 4 to 8, and 12 and 13, of the table in section 9‑1 of the Income Tax Assessment Act 1997. In most respects, the trust is treated like a company.

Note 2:       This Part also applies to a trustee covered by item 11 of the table in section 9‑1 of the Income Tax Assessment Act 1997, but only to the extent set out in section 45‑455, and the rest of Subdivision 45‑N, in this Schedule.

45‑15  Liability for instalments

             (1)  The Commissioner may give you an instalment rate from time to time, by giving you written notice of the rate.

             (2)  You are liable to pay instalments under this Division if the Commissioner has given you an instalment rate.

Note 1:       The instalment rate that the Commissioner gives you is worked out under section 45‑320 or 45‑775.

Note 2:       If your assessable income has always consisted wholly of withholding payments (other than non‑quotation withholding payments), the Commissioner will not give you an instalment rate.

Note 3:       Work out the amount of your instalments under Subdivision 45‑C.

Note 4:       If the Commissioner withdraws the rate under section 45‑90, you are not liable to pay further instalments.

Note 5:       For provisions about collection and recovery of amounts you are liable to pay under this Part, see Part 4‑15.

45‑20  Information to be given to the Commissioner by certain payers

             (1)  If you are liable to pay an instalment for a period (even if it is a nil amount), you must notify the Commissioner of the amount of your *instalment income for the period.

             (2)  You must notify the Commissioner in the *approved form and on or before the day when the instalment is due (regardless of whether it is paid).

Exceptions

             (3)  Subsection (1) does not apply to:

                     (a)  a quarterly instalment worked out under section 45‑112 (on the basis of GDP‑adjusted notional tax or estimated benchmark tax); or

                     (b)  an annual instalment, unless it is worked out under paragraph 45‑115(1)(a) (based on the Commissioner’s rate and your instalment income for the income year).

45‑25  Penalty for failure to notify Commissioner

             (1)  If you fail to notify the Commissioner of an amount as required by section 45‑20, or you notify an amount that is less than the correct amount, you are liable to pay the *failure to notify penalty on the amount, or on the shortfall, multiplied by the instalment rate that you are required to use to work out the instalment for the period, for each day in the period that:

                     (a)  started at the beginning of the day by which the amount was due to be paid; and

                     (b)  finishes at the end of the day before you notify the Commissioner of the correct amount, or he or she otherwise becomes aware of it.

             (2)  This section does not apply to a notification required to be lodged on or after 1 July 2000.

Note:          See instead Division 286 in Schedule 1 to the Taxation Administration Act 1953.

45‑30  Credit for instalments payable

             (1)  You are entitled to a credit when the Commissioner makes an assessment of the income tax you are liable to pay for an income year or an assessment that no income tax is payable by you for an income year.

             (2)  The credit is equal to:

                        •  the total of each instalment payable by you for the income year (even if you have not yet paid it);

reduced by:

                        •  the total of each credit that you have claimed under section 45‑215 or 45‑420 in respect of such an instalment.

             (3)  The making of the assessment, and the resulting credit entitlement, do not affect the liability to pay an instalment.

Note:          How the credit is applied is set out in Division 3 of Part IIB.

             (4)  If:

                     (a)  you are a *subsidiary member of a *consolidated group at any time during a *consolidation transitional year for you; and

                     (b)  an amount of instalment payable by you, or an amount of credit claimed by you under section 45‑215 or 45‑420, is taken into account in working out a credit to which the *head company of that consolidated group is entitled under section 45‑865 for a consolidation transitional year for the head company;

that amount, to the extent to which it is so taken into account under that section, is not to be taken into account in working out any credit to which you are entitled under this section for any year.

Subdivision 45‑BWhen instalments are due

Table of sections

45‑50        Liability to pay instalments

45‑60        Meaning of instalment quarter

45‑61        When quarterly instalments are due—payers of quarterly instalments

45‑70        When annual instalments are due

45‑75        Instalments recoverable in same way as income tax

45‑80        General interest charge on late payment

45‑90        Commissioner may withdraw instalment rate

45‑50  Liability to pay instalments

             (1)  Subject to subsection (4), you are liable to pay an instalment for an *instalment quarter in an income year if, at the end of that instalment quarter, you are:

                     (a)  a *quarterly payer who pays 4 instalments annually on the basis of GDP‑adjusted notional tax; or

                     (b)  a *quarterly payer who pays on the basis of instalment income.

             (2)  Subject to subsection (4), you are liable to pay an instalment for an *instalment quarter that is the third or fourth instalment quarter in an income year if, at the end of that quarter, you are a *quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax.

             (3)  Subject to subsection (4), you are liable to pay an instalment for an income year if, at the end of the *starting instalment quarter in that year, you are an *annual payer.

             (4)  You are only liable to pay an instalment for an *instalment quarter or an income year if:

                     (a)  the Commissioner has given you an instalment rate; and

                     (b)  the Commissioner has not withdrawn your instalment rate before the end of that quarter or year.

45‑60  Meaning of instalment quarter

                   For an income year (whether it ends on 30 June or not), the following are the instalment quarters:

                     (a)  your first instalment quarter consists of the first 3 months of the income year; and

                     (b)  your second instalment quarter consists of the fourth, fifth and sixth months of the income year; and

                     (c)  your third instalment quarter consists of the seventh, eighth and ninth months of the income year; and

                     (d)  your fourth instalment quarter consists of the tenth, 11th and 12th months of the income year.

45‑61  When quarterly instalments are due—payers of quarterly instalments

You are not a deferred BAS payer

             (1)  Subject to subsection (2), if you are:

                     (a)  a *quarterly payer who pays on the basis of instalment income; or

                     (b)  a *quarterly payer who pays 4 instalments annually on the basis of GDP‑adjusted notional tax; or

                     (c)  a *quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax;

the instalment for an *instalment quarter that you are liable to pay is due on or before the 21st day of the month after the end of that quarter.

Note:          You are only liable to pay instalments for the third and fourth instalment quarters in an income year if you are a quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax. See section 45‑50.

You are a deferred BAS payer

             (2)  If:

                     (a)  subsection (1) would, but for this subsection, have applied to you in relation to an *instalment quarter; but

                     (b)  you are a *deferred BAS payer on the 21st day of the month after the end of that quarter;

the instalment for that quarter is instead due on or before:

                     (c)  the 28th day of the month after the end of that quarter unless all or a part of a December falls within the last month of that quarter; or

                     (d)  if all or a part of a December falls within the last month of that quarter—the next 28 February.

Note 1:       You are only liable to pay instalments for the third and fourth instalment quarters in an income year if you are a quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax. See section 45‑50.

Note 2:       If you are the head company of a consolidated group to which Subdivision 45‑Q applies, the instalment is due on or before the 21st day of the month after the end of the quarter: see section 45‑715.

45‑70  When annual instalments are due

             (1)  This section applies if you are liable to pay an annual instalment for the 2002‑03 income year or a later income year.

             (2)  If the income year ends on 30 June, the instalment is due on or before the next 21 October.

             (3)  If the income year ends on a day other than 30 June, the instalment is due on or before the 21st day of the fourth month after the end of the income year.

45‑75  Instalments recoverable in same way as income tax

                   Instalments are to be treated as income tax for the purposes of sections 254 and 255 of the Income Tax Assessment Act 1936.

45‑80  General interest charge on late payment

                   If you fail to pay some or all of an instalment by the time by which the instalment is due to be paid, you are liable to pay the *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 instalment was due to be paid; and

                     (b)  finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

                              (i)  the instalment;

                             (ii)  general interest charge on any of the instalment.

45‑90  Commissioner may withdraw instalment rate

             (1)  The Commissioner may:

                     (a)  by giving you written notice, withdraw your instalment rate; or

                     (b)  by notice published in the Gazette, withdraw the instalment rate of a class of entities that includes you.

Note:          If the Commissioner does so, you cease to be liable to pay instalments (even if you have chosen a rate under section 45‑205). See subsection 45‑50(4).

             (2)  If the Commissioner withdraws your instalment rate and later gives you another one:

                     (a)  you are again liable to pay instalments in accordance with section 45‑50; and

                     (b)  this Division has effect as if the Commissioner has given you an instalment rate for the first time.

Subdivision 45‑CWorking out instalment amounts

Table of sections

45‑110      How to work out amount of quarterly instalment on instalment income basis

45‑112      Amount of instalment for quarterly payer who pays on basis of GDP‑adjusted notional tax

45‑115      How to work out amount of annual instalment

45‑120      Meaning of instalment income

45‑110  How to work out amount of quarterly instalment on instalment income basis

             (1)  Work out the amount of an instalment you are liable to pay for an *instalment quarter as follows if, at the end of that instalment quarter, you are a *quarterly payer who pays on the basis of instalment income:

             (2)  For the purposes of the formula in subsection (1):

Applicable instalment rate means:

                     (a)  unless paragraph (b) or (c) applies—the most recent instalment rate given to you by the Commissioner under section 45‑15 before the end of that quarter; or

                     (b)  if you have chosen an instalment rate for that quarter under section 45‑205—that rate; or

                     (c)  if you have chosen an instalment rate under section 45‑205 for an earlier *instalment quarter in that income year (and paragraph (b) does not apply)—that rate.

Note:          If you believe the Commissioner’s rate is not appropriate for the current income year, you may choose a different instalment rate under Subdivision 45‑F.

45‑112  Amount of instalment for quarterly payer who pays on basis of GDP‑adjusted notional tax

             (1)  If, at the end of an *instalment quarter in an income year, you are a *quarterly payer who pays on the basis of GDP‑adjusted notional tax who is liable to pay an instalment for that quarter, the amount of your instalment for that quarter is:

                     (a)  unless paragraph (b) or (c) applies—the amount that the Commissioner works out under Subdivision 45‑L, and notifies to you, as the amount of the instalment; or

                     (b)  if you choose to work out the amount of the instalment on the basis of your estimate of your *benchmark tax for that income year, and you notify the Commissioner in accordance with subsection (2)—the amount worked out under Subdivision 45‑M; or

                     (c)  if paragraph (b) applied to your instalment for an earlier *instalment quarter in that income year—the amount that the Commissioner works out under Subdivision 45‑M, and notifies to you, as the amount of the instalment.

             (2)  If the amount of the instalment is worked out under paragraph (1)(b) on the basis of your estimate of your *benchmark tax for the income year, you must notify the Commissioner in the *approved form, on or before the day when the instalment is due (disregarding subsection (3)), of the amount of that estimate.

             (3)  If:

                     (a)  after the end of an *instalment quarter the Commissioner notifies you of an amount as the amount of your instalment for that quarter; and

                     (b)  the amount of your instalment for that quarter is not worked out under paragraph (1)(b);

the instalment is due on or before the 21st day after the day on which the notice is given.

45‑115  How to work out amount of annual instalment

             (1)  The amount of an instalment you are liable to pay for the 2002‑03 income year or a later income year is whichever of the following you choose:

                     (a)  the amount worked out using the formula:

                     (b)  your most recent *notional tax notified by the Commissioner before the end of the income year;

                     (c)  the amount that you estimate will be your *benchmark tax for the income year.

Note 1:       You cannot choose a different instalment rate under Subdivision 45‑F if you are an annual payer. Instead you can work out the amount of your instalment under paragraph (c).

Note 2:       You may be liable to general interest charge under section 45‑235 if working out your instalment under paragraph (c) leads you to pay an instalment that is less than 85% of your benchmark tax for the income year (worked out by the Commissioner under section 45‑365).

             (2)  Commissioner’s instalment rate for an income year means the most recent instalment rate given to you by the Commissioner before the end of the income year.

             (3)  If you choose to work out your instalment under paragraph (1)(c), you must notify the Commissioner, in the *approved form, of the amount of the instalment on or before the day when it is due.

45‑120  Meaning of instalment income

General rule

             (1)  Your instalment income for a period includes your *ordinary income *derived during that period, but only to the extent that it is assessable income of the income year that is or includes that period.

Note 1:       No other amount is instalment income unless it is covered by another provision of this section or by Subdivision 45‑H or 45‑I.

Note 1A:    The operation of this section and other provisions relating to instalment income is affected by sections 45‑855 and 45‑860 (about a member of a consolidated group during a period before the members of the group are treated as a single entity for the purposes of this Part.)

Note 2:       If during that period you are a partner in a partnership, or a beneficiary of a trust, your instalment income also includes some of the partnership’s or trust’s instalment income for the period (except in some cases). See Subdivision 45‑H or 45‑I.

Statutory income included for some entities

             (2)  The instalment income of:

                     (a)  a *complying approved deposit fund or a *non‑complying approved deposit fund; or

                     (b)  a *complying superannuation fund or a *non‑complying superannuation fund; or

                     (c)  a *pooled superannuation trust; or

                    (ca)  an *FHSA trust;

for a period also includes the entity’s *statutory income, to the extent that:

                     (d)  it is reasonably attributable to that period; and

                     (e)  it is assessable income of the income year that is or includes that period.

          (2A)  The instalment income of a *life insurance company for a period also includes any part of its *statutory income that:

                     (a)  is reasonably attributable to that period; and

                     (b)  is included in the *complying superannuation/FHSA class of its taxable income for the income year that is or includes that period.

Net gains under Subdivision 250‑E of the Income Tax Assessment Act 1997 included in instalment income

          (2B)  Your instalment income for a period also includes the difference between:

                     (a)  a gain (or gains) you make from a *financial arrangement to the extent to which it is (or they are):

                              (i)  assessable under Subdivision 250‑E of the Income Tax Assessment Act 1997; and

                             (ii)  reasonably attributable to that period; and

                     (b)  a loss (or losses) you make from a financial arrangement to the extent to which it is (or they are):

                              (i)  allowable to you as a deduction under Subdivision 250‑E of the Income Tax Assessment Act 1997; and

                             (ii)  reasonably attributable to that period.

This is so only if the gain (or gains) referred to in paragraph (a) exceeds the loss (or losses) referred to in paragraph (b).

Effect of Division 230 of the Income Tax Assessment Act 1997 on instalment income

          (2C)  Your instalment income for a period also includes the difference between:

                     (a)  a gain (or gains) you make from a *financial arrangement to the extent to which it is (or they are):

                              (i)  assessable under Division 230 of the Income Tax Assessment Act 1997; and

                             (ii)  reasonably attributable to that period; and

                     (b)  a loss (or losses) you make from a financial arrangement to the extent to which it is (or they are):

                              (i)  allowable to you as a deduction under Division 230 of the Income Tax Assessment Act 1997; and

                             (ii)  reasonably attributable to that period.

This is so only if the gain (or gains) referred to in paragraph (a) equals or exceeds the loss (or losses) referred to in paragraph (b).

          (2D)  However, your instalment income for a period is worked out disregarding subsection (2C) if any of the following apply:

                     (a)  you are an individual;

                     (b)  the only gains and losses that would be taken into account under subsection (2C) for the period are from *financial arrangements that are *qualifying securities.

          (2E)  A gain or loss that is taken into account under subsection (2C) in working out an amount (including a nil amount) to be included in your instalment income for a period is not to be, to any extent, taken into account again under another provision of this section in calculating your instalment income for the same or any other period.

Exclusion: amounts in respect of withholding payments

             (3)  Your instalment income for a period does not include amounts in respect of:

                     (a)  *withholding payments (except *non‑quotation withholding payments) made to you during that period; and

                     (b)  amounts included in your assessable income under section 86‑15 of the Income Tax Assessment Act 1997 for which there are amounts required to be paid under Division 13; and

                     (c)  which a penalty is applicable under section 12‑415.

Farm management deposits: effect of making and repayment

             (4)  Your instalment income for a period is reduced (but not below nil) by a *farm management deposit made during that period, but only to the extent that, at the end of that period, you can reasonably expect to be able to deduct the deposit under section 393‑5 of the Income Tax Assessment Act 1997 for the income year that is or includes that period.

             (5)  Your instalment income for a period also includes an amount that section 393‑10 of the Income Tax Assessment Act 1997 includes in your assessable income, for the income year that is or includes that period, because of a repayment during that period of all or some of a *farm management deposit.

Instalment income of entity that is not liable for instalments

             (6)  An entity can have *instalment income for a period even if the entity is not liable to pay an instalment for that period.

Note:          For example, although a partnership does not pay instalments, it is necessary to work out the partnership’s instalment income in order to work out instalments payable by the partners. See Subdivision 45‑H.

Subdivision 45‑DQuarterly payers

Table of sections

45‑125      Quarterly payer who pays instalments on the basis of instalment income

45‑130      Quarterly payer who pays on the basis of GDP‑adjusted notional tax

45‑132      Quarterly payer who pays 4 instalments annually on the basis of GDP‑adjusted notional tax

45‑134      Quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax

45‑125  Quarterly payer who pays instalments on the basis of instalment income

             (1)  You are a quarterly payer who pays on the basis of instalment income if:

                     (a)  at the end of the *starting instalment quarter in an income year, you are not a *quarterly payer who pays on the basis of GDP‑adjusted notional tax and you are not an *annual payer; or

                     (b)  but for this section, you would be a quarterly payer who pays on the basis of GDP‑adjusted notional tax at the end of the starting instalment quarter in an income year but you choose to pay quarterly instalments on the basis of your instalment income.

Note:          The entity must make the choice mentioned in paragraph (b) in accordance with subsection (4).

             (2)  The starting instalment quarter in an income year (the current year) is:

                     (a)  if the Commissioner gives you an instalment rate for the first time during an *instalment quarter in the current year—that instalment quarter (even if it is not the first instalment quarter in the current year); or

                     (b)  if the Commissioner has given you an instalment rate during a previous income year and your instalment rate has not been withdrawn—the first instalment quarter in the current year.

How and when you become such a payer

             (3)  You become a *quarterly payer who pays on the basis of instalment income just before the end of the *starting instalment quarter if paragraph (1)(a) or (b) is satisfied.

             (4)  You must make the choice mentioned in paragraph (1)(b) by notifying the Commissioner in the *approved form on or before the day on which the instalment for that quarter is due (disregarding subsection 45‑112(3)).

How and when you stop being such a payer

             (5)  If you are a *quarterly payer who pays on the basis of instalment income because of paragraph (1)(a), you stop being such a payer at the start of the first *instalment quarter in the next income year if, at the end of that quarter, you become:

                     (a)  a *quarterly payer who pays on the basis of GDP‑adjusted notional tax; or

                     (b)  an *annual payer.

             (6)  If you are a *quarterly payer who pays on the basis of instalment income because of paragraph (1)(b), you stop being such a payer at the start of the first *instalment quarter in the next income year if:

                     (a)  you become an *annual payer at the end of that quarter; or

                     (b)  both of the following conditions apply:

                              (i)  you choose not to be a quarterly payer who pays on the basis of instalment income;

                             (ii)  you become a *quarterly payer who pays on the basis of GDP‑adjusted notional tax at the end of that quarter.

             (7)  You may only make the choice mentioned in paragraph (6)(b) if you would otherwise satisfy paragraph 45‑130(1)(a), (b), (c) or (d) at the end of that quarter. You must make that choice by notifying the Commissioner in the *approved form on or before the day on which the instalment for that quarter is due (disregarding subsection 45‑112(3)).

45‑130  Quarterly payer who pays on the basis of GDP‑adjusted notional tax

             (1)  You are a quarterly payer who pays on the basis of GDP‑adjusted notional tax if, at the end of the *starting instalment quarter in an income year:

                     (a)  you are an individual who is not an *annual payer or a *quarterly payer who pays on the basis of instalment income; or

                     (b)  you are a *self‑assessment entity:

                              (i)  that is not an *annual payer or a *quarterly payer who pays on the basis of instalment income; and

                             (ii)  your base assessment instalment income (within the meaning of section 45‑320) for the *base year is $2 million or less; or

                     (c)  you satisfy all of the following conditions:

                              (i)  you are a self‑assessment entity whose base assessment instalment income (within the meaning of section 45‑320) for the *base year is more than $2 million;

                             (ii)  you are not an annual payer, but you satisfy the conditions set out in subsection 45‑140(1) for an annual payer;

                            (iii)  you are not a quarterly payer who pays on the basis of instalment income; or

                     (d)  for the 2009‑10 income year or a later income year—you are a *small business entity (other than because of subsection 328‑110(4) of the Income Tax Assessment Act 1997).

Note:          Paragraph (a) may apply to you if you are a multi‑rate trustee. See section 45‑468.

How and when you become such a payer

             (2)  You become such a payer just before the end of the *starting instalment quarter if paragraph (1)(a), (b), (c) or (d) is satisfied.

          (2A)  For the purposes of subsection (2), you satisfy proposed paragraph (1)(d) at the end of the *starting instalment quarter in an income year if you are a *small business entity (other than because of subsection 328‑110(4) of the Income Tax Assessment Act 1997) for the income year that includes that instalment quarter.

How and when you stop being such a payer

             (3)  You stop being a *quarterly payer who pays on the basis of GDP‑adjusted notional tax at the start of the first *instalment quarter in the next income year if you fail to satisfy paragraph (1)(a), (b), (c) or (d) at the end of that quarter.

          (3A)  For the purposes of subsection (3), you fail to satisfy proposed paragraph (1)(d) at the end of the first *instalment quarter in an income year if you are not a *small business entity (other than because of subsection 328‑110(4) of the Income Tax Assessment Act 1997) for the income year that includes that instalment quarter.

             (4)  In addition, you stop being such a payer at the start of the first *instalment quarter in the next income year if, at the end of that quarter, you become:

                     (a)  a *quarterly payer who pays on the basis of instalment income; or

                     (b)  an *annual payer.

45‑132  Quarterly payer who pays 4 instalments annually on the basis of GDP‑adjusted notional tax

             (1)  You are a quarterly payer who pays 4 instalments annually on the basis of GDP‑adjusted notional tax if, at the end of the *starting instalment quarter in an income year:

                     (a)  you satisfy the conditions to be a *quarterly payer who pays on the basis of GDP‑adjusted notional tax under section 45‑130; and

                     (b)  you do not satisfy the conditions to be a *quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax under section 45‑134.

How and when you become such a payer

             (2)  You become such a payer just before the end of the *starting instalment quarter if paragraphs (1)(a) and (b) are satisfied.

How and when you stop being such a payer

             (3)  You stop being a *quarterly payer who pays 4 instalments annually on the basis of GDP‑adjusted notional tax at the start of the first *instalment quarter in the next income year if you fail to satisfy paragraphs (1)(a) and (b) at the end of that quarter.

             (4)  In addition, you stop being such a payer at the start of the first *instalment quarter in the next income year if, at the end of that quarter, you become:

                     (a)  a *quarterly payer who pays on the basis of instalment income; or

                     (b)  an *annual payer.

45‑134  Quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax

             (1)  You are a quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax if, at the end of the *starting instalment quarter in an income year, you are an individual that is a *quarterly payer who pays on the basis of GDP‑adjusted notional tax and one or more of the following paragraphs apply:

                     (a)  both of the following conditions are satisfied:

                              (i)  you are carrying on a *primary production business in the income year;

                             (ii)  the assessable income that was *derived from, or resulted from, a primary production business that you carried on in the *base year exceeded the amount of so much of your deductions in that year that are reasonably related to that income;

                     (b)  both of the following conditions are satisfied:

                              (i)  you are a *special professional in the income year;

                             (ii)  your *assessable professional income in the base year exceeded the amount of so much of your deductions in that year that are reasonably related to that income.

Note:          This section may apply to you if you are a multi‑rate trustee. See section 45‑468.

How and when you become such a payer

             (2)  You become such a payer just before the end of the *starting instalment quarter if subsection (1) is satisfied.

How and when you stop being such a payer

             (3)  You stop being a *quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax at the start of the first *instalment quarter in the next income year if you fail to satisfy subsection (1) at the end of that quarter.

             (4)  In addition, you also stop being such a payer at the start of the first *instalment quarter in the next income year if, at the end of that quarter, you become:

                     (a)  a *quarterly payer who pays on the basis of instalment income; or

                     (b)  an *annual payer.

Subdivision 45‑EAnnual payers

Table of sections

When you start and stop being an annual payer

45‑140      Choosing to pay annual instalments

45‑145      Meaning of instalment group

45‑150      Entity stops being annual payer if involved with GST registration or instalment group

45‑155      Entity stops being annual payer if notional tax is $8,000 or more, or entity chooses to pay quarterly

45‑160      Head company of a consolidated group stops being annual payer

When you start and stop being an annual payer

45‑140  Choosing to pay annual instalments

             (1)  You may choose to pay instalments annually instead of quarterly if, at the end of the *starting instalment quarter, you satisfy the following conditions:

                     (a)  you are neither registered, nor *required to be registered, under Part 2‑5 of the *GST Act; and

                     (b)  you are not a partner in a partnership that is registered, or required to be registered, under that Part; and

                     (c)  your most recent *notional tax notified by the Commissioner is less than $8,000; and

                     (d)  in the case of a company—the company is not a *participant in a *GST joint venture under Division 51 of that Act; and

                     (e)  in the case of a company—the company is not part of an *instalment group.

Note:          You cannot choose to be an annual payer while you are the head company of a consolidated group to which Subdivision 45‑Q applies: see section 45‑720.

          (1A)  You may also choose at a time (subject to subsection (2)) to pay instalments annually instead of quarterly if at that time either:

                     (a)  an *annual tax period election of yours has effect and, if you are a partner in one or more partnerships that are registered under Part 2‑5 of the *GST Act, an annual tax period election of each of those partnerships has effect; or

                     (b)  all of the following subparagraphs apply:

                              (i)  you are neither registered, nor *required to be registered, under Part 2‑5 of the GST Act;

                             (ii)  you are a partner in one or more partnerships that are registered under that Part;

                            (iii)  an annual tax period election of each of those partnerships has effect;

and at the end of the *starting instalment quarter, you satisfy the following conditions:

                     (c)  you are not a partner in a partnership that is required to be registered under Part 2‑5 of the GST Act;

                     (d)  your most recent *notional tax notified by the Commissioner is less than $8,000;

                     (e)  in the case of a company—the company is not a *participant in a *GST joint venture under Division 51 of that Act;

                      (f)  in the case of a company—the company is not part of an *instalment group.

Note:          You cannot choose to be an annual payer while you are the head company of a consolidated group to which Subdivision 45‑Q applies: see section 45‑720.

             (2)  You must make the choice under subsection (1) or (1A) by notifying the Commissioner, in the *approved form, on or before the day on which that instalment would otherwise be due.

             (3)  You become an annual payer just before the end of the *starting instalment quarter if:

                     (a)  you satisfy the conditions in subsection (1) or (1A); and

                     (b)  you choose to pay instalment annually.

45‑145  Meaning of instalment group

             (1)  An instalment group consists of:

                     (a)  a company:

                              (i)  that has *majority control of at least one other company; but

                             (ii)  of which no other company has *majority control; and

                     (b)  any other company of which the first‑mentioned company has *majority control.

             (2)  A company has majority control of another company if, and only if:

                     (a)  the first company is in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the other company; or

                     (b)  the first company has the power to appoint or remove the majority of the directors of the other company; or

                     (c)  the other company is, or a majority of its directors are, accustomed or under an obligation, whether formal or informal, to act according to the directions, instructions or wishes of the first company.

45‑150  Entity stops being annual payer if involved with GST registration or instalment group

             (1)  You stop being an *annual payer if, during an *instalment quarter that is in an income year that starts after the commencement of this section:

                     (a)  you become *required to be registered under Part 2‑5 of the *GST Act; or

                     (b)  you become a partner in a partnership that is required to be registered under that Part; or

                     (c)  a partnership in which you are a partner becomes required to be registered under that Part; or

                     (d)  in the case of a company—the company becomes a *participant in a *GST joint venture under Division 51 of that Act; or

                     (e)  in the case of a company—the company becomes part of an *instalment group; or

                      (f)  an *annual tax period election of yours, or of a partnership in which you are a partner, ceases to have effect.

             (2)  If you stop being an *annual payer under subsection (1):

                     (a)  you must still pay an annual instalment for the income year mentioned in that subsection; and

                     (b)  you must pay an instalment for each instalment quarter in the next income year for which subsection 45‑50(1) or (2) requires you to do so.

             (3)  You may again become an *annual payer if:

                     (a)  after you stop being an *annual payer under subsection (1), you satisfy the conditions in subsection 45‑140(1) or (1A); and

                     (b)  you again choose under section 45‑140 to pay instalments annually.

45‑155  Entity stops being annual payer if notional tax is $8,000 or more, or entity chooses to pay quarterly

             (1)  You stop being an *annual payer at the start of the first *instalment quarter in an income year (the current year) if:

                     (a)  after the end of the first instalment quarter in the previous income year and before the end of the first instalment quarter in the current year, the Commissioner notifies you of your *notional tax, and it is $8,000 or more; or

                     (b)  you choose to pay instalments quarterly instead of annually.

          (1A)  You must make the choice by notifying the Commissioner, in the *approved form, on or before the day on which the instalment for the first *instalment quarter for the current year would otherwise be due (disregarding subsection 45‑112(3)).

             (2)  You must pay an instalment for the first *instalment quarter of the next income year, and later instalment quarters, in accordance with Subdivision 45‑B.

             (3)  You must still pay an annual instalment for the previous income year referred to in subsection (1).

             (4)  You may again become an *annual payer at the end of the first *instalment quarter in a later income year if:

                     (a)  at that time, you satisfy the conditions in subsection 45‑140(1) or in paragraphs 45‑140(1A)(c), (d), (e) and (f); and

                     (b)  you again choose under section 45‑140 to pay annually.

45‑160  Head company of a consolidated group stops being annual payer

             (1)  You stop being an *annual payer at the start of an *instalment quarter if Subdivision 45‑Q starts applying to you as the *head company of a *consolidated group during that quarter.

             (2)  You must pay an instalment for that *instalment quarter and later instalment quarters in accordance with Subdivision 45‑B.

             (3)  You may again become an *annual payer if:

                     (a)  after you stop being an *annual payer under subsection (1), you satisfy the conditions in subsection 45‑140(1) or (1A); and

                     (b)  you again choose under section 45‑140 to pay instalments annually.

Note:          You cannot choose to be an annual payer while you are the head company of a consolidated group to which Subdivision 45‑Q applies: see section 45‑720.

Subdivision 45‑FVarying the instalment rate for quarterly payers who pay on the basis of instalment income

Table of sections

45‑200      Application

45‑205      Choosing a varied instalment rate

45‑210      Notifying Commissioner of varied instalment rate

45‑215      Credit on using varied rate in certain cases

45‑200  Application

                   This Subdivision applies if you are a *quarterly payer who pays on the basis of instalment income at the end of an *instalment quarter.

45‑205  Choosing a varied instalment rate

             (1)  You may choose an instalment rate for working out under section 45‑110 the amount of your instalment for an *instalment quarter in an income year.

             (2)  If you do so, you must use that instalment rate to work out the amount of that instalment. (You cannot later choose another instalment rate for working out that amount.)

Note 1:       If choosing a rate leads you to pay an instalment that is too low, you may be liable to general interest charge under section 45‑230.

Note 2:       If you choose a rate under this section, you must use it even if the Commissioner later gives you a new instalment rate.

             (3)  You must also use that instalment rate to work out the amount of the instalment that you are liable to pay for each later *instalment quarter in that income year, unless you choose another instalment rate under subsection (1) for working out that amount.

Note 1:       If you choose a rate under this section, you must use it even if the Commissioner later gives you a new instalment rate.

Note 2:       If a rate you have chosen for an instalment quarter is not appropriate for a later instalment quarter in the same income year, you should choose another rate under subsection (1) for the later quarter. If the earlier rate is too low, you may be liable to general interest charge under section 45‑230.

             (4)  However, for working out under section 45‑110 the amount of your instalment for an *instalment quarter in a later income year, you must use the most recent instalment rate given to you by the Commissioner before the end of that quarter, unless you again choose another instalment rate under subsection (1).

45‑210  Notifying Commissioner of varied instalment rate

                   If you work out the amount of an instalment using an instalment rate you have chosen under section 45‑205, you must specify that rate in the notice about your instalment income that you must give the Commissioner under section 45‑20.

45‑215  Credit on using varied rate in certain cases

             (1)  You are entitled to claim a credit if:

                     (a)  the amount of your instalment for an *instalment quarter (the current quarter) in an income year is to be worked out using an instalment rate you chose under section 45‑205; and

                     (b)  that rate is lower than the instalment rate you used to work out the amount of your instalment for the previous instalment quarter (if any) in the same income year; and

                     (c)  the amount worked out using the method statement is greater than nil.

Method statement

Step 1.   Add up the instalments you are liable to pay for the earlier *instalment quarters in the income year (even if you have not yet paid all of them).

Step 2.   Subtract from the step 1 amount each earlier credit that you have claimed under this section or section 45‑420 in respect of the income year.

Step 3.   Multiply the total of your *instalment income for those earlier *instalment quarters by the instalment rate to be used for the current quarter.

Step 4.   Subtract the step 3 amount from the step 2 amount.

Step 5.   If the result is a positive amount, it is the amount of the credit you can claim.

             (2)  A claim for a credit must be made in the *approved form on or before the day on which the instalment for the current quarter is due.

Note:          How the credit is applied is set out in Division 3 of Part IIB.

             (3)  The credit entitlement does not affect your liability to pay an instalment.

Subdivision 45‑GGeneral interest charge payable in certain cases if instalments are too low

Table of sections

45‑230      Liability to GIC on shortfall in quarterly instalment worked out on the basis of varied rate

45‑232      Liability to GIC on shortfall in quarterly instalment worked out on the basis of estimated benchmark tax

45‑233      Reduction in GIC liability under section 45‑232 if shortfall is made up in later instalment

45‑235      Liability to GIC on shortfall in annual instalment

45‑240      Commissioner may remit general interest charge

45‑230  Liability to GIC on shortfall in quarterly instalment worked out on the basis of varied rate

             (1)  You are liable to pay the *general interest charge under this section if:

                      (a)  you use an instalment rate (the varied rate) under section 45‑205 to work out the amount of your instalment for an *instalment quarter (the variation quarter) in an income year; and

                     (b)  the varied rate is less than 85% of your *benchmark instalment rate for that income year that the Commissioner works out under Subdivision 45‑K.

             (2)  You are liable to pay the *general interest charge on the amount worked out as follows:

where:

rate discrepancy means the difference between the varied rate and the lesser of:

                     (a)  the most recent instalment rate given to you by the Commissioner before the end of the variation quarter; and

                     (b)  your *benchmark instalment rate for that income year.

credit adjustment means:

                     (a)  if, as a result of using the varied rate for the variation quarter, you claimed a credit under section 45‑215—the amount worked out as follows:

                            or the amount of the credit, whichever is less; and

                     (b)  otherwise—nil.

          (2A)  If the variation quarter is in a *consolidation transitional year for you as a *subsidiary member of a *consolidated group, a reference in subsection (2) to:

                     (a)  your *instalment income for the variation quarter; or

                     (b)  your instalment income for the earlier instalment quarters in the income year;

is taken to be a reference to so much of that income as is reasonably attributable to the period in that quarter or those quarters (as appropriate) during which you are not a subsidiary member of the group.

             (3)  You are liable to pay the charge for each day in the period that:

                     (a)  started at the beginning of the day by which the instalment for the variation quarter was due to be paid; and

                     (b)  finishes at the end of the day on which your assessed tax for the income year is due to be paid.

             (4)  The Commissioner must give you written notice of the *general interest charge to which you are liable under subsection (2). You must pay the charge within 14 days after the notice is given to you.

             (5)  If any of the *general interest charge to which you are liable under subsection (2) remains unpaid at the end of the 14 days referred to in subsection (4), you are also liable to pay the *general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts at the end of those 14 days; and

                     (b)  finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

                              (i)  the unpaid amount;

                             (ii)  general interest charge on the unpaid amount.

45‑232  Liability to GIC on shortfall in quarterly instalment worked out on the basis of estimated benchmark tax

             (1)  You are liable to pay the *general interest charge under this section if:

                     (a)  the amount of your instalment for an *instalment quarter (the variation quarter) in an income year is worked out under paragraph 45‑112(1)(b) or (c) on the basis of your estimate of your *benchmark tax for that income year; and

                     (b)  the estimate used is less than 85% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

Amount on which the charge is payable

             (2)  You are liable to pay the *general interest charge on the amount worked out as follows (if it is a positive amount):

where:

acceptable amount, of your instalment for an *instalment quarter in an income year, has the meaning given by subsections (3), (3A), (3B), (3C) and (3D).

actual amount means:

                     (a)  the amount of your instalment, as worked out on the basis of the estimate; or

                     (b)  if, as a result of using the estimate, you claimed a credit under section 45‑420 for the variation quarter—the amount of the credit, expressed as a negative amount.

             (3)  If you are a *quarterly payer who pays 4 instalments annually on the basis of GDP‑adjusted notional tax, the acceptable amount of your instalment for that instalment quarter is:

                     (a)  if the amount of the instalment is worked out under paragraph 45‑112(1)(b) or (c)—the amount worked out using the table in this subsection (which can be a negative amount); or

                     (b)  otherwise—the amount notified to you by the Commissioner under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter.

 

Acceptable amount of an instalment

Item

If the *instalment quarter is:

The acceptable amount of your instalment for that instalment quarter is:

1

the first in that income year for which you are liable to pay an instalment

the lower of:

(a) the amount that the Commissioner notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter; and

(b) 25% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

2

the second in that income year for which you are liable to pay an instalment

the lower of:

(a) the amount that the Commissioner would have notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter if the amounts of all your instalments for that income year had been required to be worked out under Subdivision 45‑L; and

(b) the amount worked out by subtracting:

•     the *acceptable amount of your instalment for the earlier instalment quarter in that income year;

      from:

•     50% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

3

the third in that income year for which you are liable to pay an instalment

the lower of:

(a) the amount that the Commissioner would have notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter if the amounts of all your instalments for that income year had been required to be worked out under Subdivision 45‑L; and

(b) the amount worked out by subtracting:

•     the total of the *acceptable amounts of your instalments for the earlier instalment quarters in that income year;

      from:

•     75% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

4

the fourth in that income year for which you are liable to pay an instalment

the lower of:

(a) the amount that the Commissioner would have notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter if the amounts of all your instalments for that income year had been required to be worked out under Subdivision 45‑L; and

(b) the amount worked out by subtracting:

•     the total of the *acceptable amounts of your instalments for the earlier instalment quarters in that income year;

      from:

•     100% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

          (3A)  Subject to subsections (3B), (3C) and (3D), if you are a *quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax, the acceptable amount of your instalment for an *instalment quarter in an income year is:

                     (a)  if the amount of the instalment is worked out under paragraph 45‑112(1)(b) or (c)—the amount worked out using the table in this subsection (which can be a negative amount); or

                     (b)  otherwise—the amount notified to you by the Commissioner under paragraph 45‑112(1)(a) as the amount of your instalment for that instalment quarter.

 

Acceptable amount of an instalment

Item

If the *instalment quarter is:

The acceptable amount of your instalment for that instalment quarter is:

1

the third *instalment quarter in that income year

the lower of:

(a) the amount that the Commissioner notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter; and

(b) 75% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

2

the fourth *instalment quarter in that income year

the lower of:

(a) the amount that the Commissioner would have notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter if the amounts of all your instalments for that income year had been required to be worked out under Subdivision 45‑L; and

(b) the amount worked out by subtracting:

•     the *acceptable amount of your instalment for the earlier instalment quarter in that income year;

      from:

•     100% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

          (3B)  If:

                     (a)  you are a *quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax; and

                     (b)  the Commissioner first gives you an instalment rate during the second *instalment quarter in an income year;

the acceptable amount of your instalment for an instalment quarter in that income year is:

                     (c)  if the amount of the instalment is worked out under paragraph 45‑112(1)(b) or (c)—the amount worked out using the table in this subsection (which can be a negative amount); or

                     (d)  otherwise—the amount notified to you by the Commissioner under paragraph 45‑112(1)(a) as the amount of your instalment for that instalment quarter.

 

Acceptable amount of an instalment

Item

If the *instalment quarter is:

The acceptable amount of your instalment for that instalment quarter is:

1

the third *instalment quarter in that income year

the lower of:

(a) the amount that the Commissioner notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter; and

(b) 50% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

2

the fourth *instalment quarter in that income year

the lower of:

(a) the amount that the Commissioner would have notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter if the amounts of all your instalments for that income year had been required to be worked out under Subdivision 45‑L; and

(b) the amount worked out by subtracting:

•     the *acceptable amount of your instalment for the earlier instalment quarter in that income year;

      from:

•     75% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

          (3C)  If:

                     (a)  you are a *quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax; and

                     (b)  the Commissioner first gives you an instalment rate during the third *instalment quarter in an income year;

the acceptable amount of your instalment for an instalment quarter in that income year is:

                     (c)  if the amount of the instalment is worked out under paragraph 45‑112(1)(b) or (c)—the amount worked out using the table in this subsection (which can be a negative amount); or

                     (d)  otherwise—the amount notified to you by the Commissioner under paragraph 45‑112(1)(a) as the amount of your instalment for that instalment quarter.

 

Acceptable amount of an instalment

Item

If the *instalment quarter is:

The acceptable amount of your instalment for that instalment quarter is:

1

the third *instalment quarter in that income year

the lower of:

(a) the amount that the Commissioner notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter; and

(b) 25% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

2

the fourth *instalment quarter in that income year

the lower of:

(a) the amount that the Commissioner would have notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that *instalment quarter if the amounts of all your instalments for that income year had been required to be worked out under Subdivision 45‑L; and

(b) the amount worked out by subtracting:

•     the *acceptable amount of your instalment for the earlier instalment quarter in that income year;

      from:

•     50% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

          (3D)  If:

                     (a)  you are a *quarterly payer who pays 2 instalments annually on the basis of GDP‑adjusted notional tax; and

                     (b)  the Commissioner first gives you an instalment rate during the fourth *instalment quarter in an income year;

the acceptable amount of your instalment for an instalment quarter in that income year is the lower of the following amounts:

                     (c)  the amount that the Commissioner notified to you under paragraph 45‑112(1)(a) as the amount of your instalment for that instalment quarter;

                     (d)  25% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

Period for which the charge is payable

             (4)  You are liable to pay the charge for each day in the period that:

                     (a)  started at the beginning of the day by which the instalment for the variation quarter was due to be paid; and

                     (b)  finishes at the end of the day on which your assessed tax for the income year is due to be paid.

Commissioner to notify you

             (5)  The Commissioner must give you written notice of the *general interest charge to which you are liable under subsection (2). You must pay the charge within 14 days after the notice is given to you.

Further charge if charge under subsection (2) remains unpaid

             (6)  If any of the *general interest charge to which you are liable under subsection (2) remains unpaid at the end of the 14 days referred to in subsection (5), you are also liable to pay the *general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts at the end of those 14 days; and

                     (b)  finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

                              (i)  the unpaid amount;

                             (ii)  general interest charge on the unpaid amount.

Modifications for subsidiary member of consolidated group

             (7)  Subsections (1) to (6) apply to you with the modifications set out in subsections (8) to (10) if the variation quarter is in a *consolidation transitional year for you as a *subsidiary member of a *consolidated group.

             (8)  For the purposes of subsection (7), a reference in subsection (1), (3), (3A), (3B), (3C) and (3D) to your *benchmark tax for that year is taken to be a reference to the amount worked out as follows:

             (9)  For the purposes of subsection (7), a reference in this section to:

                     (a)  the acceptable amount of your instalment for an *instalment quarter in an income year; or

                     (b)  the acceptable amount of your instalment for the earlier instalment quarter in an income year; or

                     (c)  the acceptable amounts of your instalments for the earlier instalment quarters in an income year;

is taken to be a reference to so much of the acceptable amount of instalment or acceptable amounts of instalments, worked out under subsection (3), (3A), (3B), (3C) or (3D) for that quarter or those quarters (as appropriate), as is reasonably attributable to the period in that quarter or those quarters (as appropriate) during which you are not a *subsidiary member of the group.

           (10)  For the purposes of subsection (7), a reference to the actual amount in subsection (2) is taken to be a reference to so much of the actual amount worked out under that subsection as is reasonably attributable to the period in the variation quarter during which you are not a *subsidiary member of the group.

45‑233  Reduction in GIC liability under section 45‑232 if shortfall is made up in later instalment

             (1)  This section reduces the amount (the shortfall) on which you are liable to pay the *general interest charge under subsection 45‑232(2) if, for a later *instalment quarter (the later quarter) that is in the same income year as the variation quarter, the amount worked out as follows is a negative amount:

That amount (expressed as a positive number) is called the top up.

             (2)  For the purposes of the formula in subsection (1):

actual amount of your instalment for the later quarter means:

                     (a)  the amount of your instalment for the later quarter, as worked out under section 45‑112; or

                     (b)  if you claimed a credit under section 45‑420 for the later quarter—the amount of the credit, expressed as a negative amount.

Amount of the reduction

             (3)  The shortfall is reduced by applying so much of the top up as does not exceed the shortfall.

             (4)  However, if some of the top up has already been applied (under any other application or applications of this section) to reduce the amount on which you are liable to pay the *general interest charge under subsection 45‑232(2) as it applies to a different *instalment quarter, the shortfall is reduced by applying so much of the top up as has not already been applied, and does not exceed the shortfall.

Period for which reduction has effect

             (5)  The reduction has effect for each day in the period that:

                     (a)  started at the beginning of the day by which the instalment for the later quarter was due to be paid; and

                     (b)  finishes at the end of the day on which your assessed tax for the income year is due to be paid.

45‑235  Liability to GIC on shortfall in annual instalment

             (1)  You are liable to pay the *general interest charge under this section if:

                     (a)  you choose to estimate the amount of your instalment (the estimated instalment amount) for an income year under former paragraph 45‑115(1)(c) or 45‑175(1)(b); and

                     (b)  that amount is less than 85% of your *benchmark tax for the income year (which the Commissioner works out under section 45‑365).

             (2)  If you estimated the amount of the instalment under former paragraph 45‑175(1)(b), you are liable to pay the *general interest charge on the difference between the estimated instalment amount and the lower of the following amounts:

                     (a)  your most recent *notional tax notified by the Commissioner at least 30 days before the day on which the instalment was due;

                     (b)  your *benchmark tax for the income year.

             (3)  If you estimated the amount of the instalment under paragraph 45‑115(1)(c), you are liable to pay the *general interest charge on the difference between the estimated instalment amount and the lowest of the following amounts:

                     (a)  the amount of your instalment worked out using the most recent instalment rate given to you by the Commissioner before the end of the income year;

                     (b)  your most recent *notional tax notified by the Commissioner before the end of the income year under subsection 45‑320(5);

                     (c)  your *benchmark tax for the income year.

             (4)  You are liable to pay the charge for each day in the period that:

                     (a)  started at the beginning of the day by which the instalment for the income year was due to be paid; and

                     (b)  finishes at the end of the day on which your assessed tax for the income year is due to be paid.

             (5)  The Commissioner must give you written notice of the *general interest charge to which you are liable under subsection (2) or (3). You must pay the charge within 14 days after the notice is given to you.

             (6)  If any of the *general interest charge to which you are liable under subsection (2) or (3) remains unpaid at the end of the 14 days referred to in subsection (5), you are also liable to pay the *general interest charge on the unpaid amount for each day in the period that:

                     (a)  starts at the end of those 14 days; and

                     (b)  finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

                              (i)  the unpaid amount;

                             (ii)  general interest charge on the unpaid amount.

45‑240  Commissioner may remit general interest charge

                   The Commissioner may, if he or she is satisfied that because special circumstances exist it would be fair and reasonable to do so, remit the whole or any part of any *general interest charge payable under subsection 45‑230(2) or 45‑232(2) or subsection 45‑235(2) or (3).

Subdivision 45‑HPartnership income­

45‑260  Instalment income for a period in which you are in a partnership

             (1)  Your instalment income for a period (the current period) includes an amount for each partnership in which you are a partner at any time during the current period. The amount is worked out using the formula:

             (2)  For the purposes of the formula in subsection (1):

your assessable income from the partnership for the last income year means so much of your individual interest in the partnership’s net income for an income year as was included by section 92 of the Income Tax Assessment Act 1936 in your assessable income for the most recent income year:

                     (a)  that ended before the start of the current period; and

                     (b)  for which you have an assessment, or for which the Commissioner has notified you that you do not have a taxable income.

             (3)  However, if for any reason the component defined in subsection (2) does not exist or is a nil amount, or the partnership had no *instalment income for that income year, your instalment income for the current period includes, for that partnership, an amount that is fair and reasonable having regard to:

                     (a)  the extent of your interest in the partnership during the current period; and

                     (b)  the partnership’s *instalment income for the current period; and

                     (c)  any other relevant circumstances.

Exception for corporate limited partnerships

             (4)  Your instalment income for the current period does not include an amount for a partnership that is a *corporate limited partnership for the income year that is or includes that period.

Note:          Your instalment income will still include a distribution by the partnership that is ordinary income. See section 45‑120.

Subdivision 45‑ITrust income included in instalment income of beneficiary

Table of sections

45‑280      Instalment income for a period in which you are a beneficiary of a trust

45‑285      Instalment income includes distributions by certain resident unit trusts

45‑286      Instalment income includes distributions by certain managed investment trusts

45‑287      When trusts are disqualified due to concentrated ownership

45‑288      Resident investment trusts for beneficiaries who are absolutely entitled

45‑290      Exceptions to exclusion of trust capital gains from beneficiary’s instalment income

45‑280  Instalment income for a period in which you are a beneficiary of a trust

             (1)  Your instalment income for a period (the current period) includes an amount for each trust of which you are a beneficiary at any time during the current period. The amount is worked out using the formula:

             (2)  For the purposes of the formula in subsection (1):

your assessable income from the trust for the last income year means so much of a share of the trust’s net income for an income year as:

                     (a)  Division 6 of Part III of the Income Tax Assessment Act 1936 included in your assessable income for the most recent income year:

                              (i)  that ended before the start of the current period; and

                             (ii)  for which you have an assessment, or for which the Commissioner has notified you that you do not have a taxable income; and

                     (b)  is not attributable to a *capital gain made by the trust.

Note:          For exceptions to paragraph (b), see section 45‑290.

             (3)  However, if for any reason the component defined in subsection (2) does not exist or is a nil amount, or the trust had no *instalment income for that income year, your instalment income for the current period includes, for that trust, an amount that is fair and reasonable having regard to:

                     (a)  the extent of your interest in the trust, and your interest in the income of the trust, during the current period; and

                     (b)  the trust’s *instalment income for the current period; and

                     (c)  any other relevant circumstances.

Exception for corporate unit trusts and public trading trusts

             (4)  Your instalment income for the current period does not include an amount for a trust if the trustee is liable to be assessed, and to pay tax, under section 102K or 102S of the Income Tax Assessment Act 1936 for the income year that is or includes that period.

Note:          Your instalment income will still include a distribution by the trust that is ordinary income. See section 45‑120.

Exception for certain resident unit trusts

             (5)  Your instalment income for the current period does not include an amount for a trust under subsection (1) if the conditions in either subsection 45‑285(1) or (2) are satisfied for you for that trust for that period.

Note:          Your instalment income will instead include a distribution by the trust: see section 45‑285.

Exception for trusts whose beneficiary is absolutely entitled

             (6)  Your instalment income for the current period does not include an amount for a trust under subsection (1) if, throughout the current period:

                     (a)  the trustee of the trust did not have any active duties to perform in the management of the trust (other than the duty to deal with the trust income and capital in accordance with any requests made or directions given by the beneficiary or beneficiaries); and

                     (b)  if there was only one beneficiary, the beneficiary:

                              (i)  was absolutely entitled to the trust assets; and

                             (ii)  had a vested and indefeasible interest in any trust income arising from time to time; and

                     (c)  if there was more than one beneficiary, each beneficiary:

                              (i)  was absolutely entitled to that beneficiary’s interest in the trust assets; and

                             (ii)  had a vested and indefeasible interest in a proportion of any trust income arising from time to time, being a proportion that corresponded to the beneficiary’s proportional interest in the trust capital.

Instead, your instalment income for the current period includes the following amount:

45‑285  Instalment income includes distributions by certain resident unit trusts

             (1)  Your instalment income for a period includes trust income or trust capital that a unit trust distributes to you, or applies for your benefit, during that period if:

                     (a)  the unit trust is a resident unit trust (within the meaning of section 102Q of the Income Tax Assessment Act 1936) for the income year of the trust that is or includes that period; and

                     (b)  throughout that period:

                              (i)  any of the units in the trust were listed for quotation in the official list of a stock exchange in Australia or elsewhere; or

                             (ii)  any of the units in the trust were offered to the public; or

                            (iii)  the units in the trust were held by at least 50 persons; and

                     (c)  section 45‑287 in this Schedule did not apply to the trust at any time during that period; and

                     (d)  throughout that period, the trust’s activities consisted only of activities listed in the definition of eligible investment business in section 102M of the Income Tax Assessment Act 1936.

(It does not matter whether the trust income or trust capital is included in your assessable income for the income year that is or includes that period.)

             (2)  Your instalment income for a period also includes trust income or trust capital that a unit trust distributes to you, or applies for your benefit, during that period if:

                     (a)  the income or capi