House of Representatives

A New Tax System (Pay As You Go) Bill 1999

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 1 - Pay as you go (PAYG) withholding

Overview

1.1 Schedule 1 to this Bill will amend the Income Tax Assessment Act 1936 , the Taxation Administration Act 1953 and various other Acts for which the Commissioner of Taxation has general administration. The amendments will establish a PAYG withholding system as part of the new comprehensive PAYG arrangements by:

closing down the PAYE system, prescribed payments system and reportable payments system and ensuring that withholding continues to apply to certain individuals (eg. employees and office holders) currently covered by the PAYE system;
introducing 3 new cases where withholding is to apply (new withholding events);
removing the current withholding arrangements for withdrawals of farm management deposits as those deposits will be included in the new PAYG instalments system ;
including the remaining withholding events in the new PAYG withholding system;
establishing a standardised group of withholding machinery rules to support all withholding events; and
making consequential amendments to other Acts (eg. Fringe Benefits Tax Assessment Act 1986 ) to enable the new PAYG withholding system to operate from 1 July 2000 within the overall framework of the reformed tax system.

Explanation of the amendments

Summary of the amendments

Purpose of the amendments

1.2 The amendments will give effect to the Governments Tax Reform policy by introducing a PAYG withholding system as part of the new PAYG arrangements.

1.3 The amendments will provide more certainty to industry and their workers about which payments made for work are to be subject to withholding at source. They provide the Governments response to industry concerns that there should be a withholding from payments for work which does not automatically attract the employer and employee labels that are part of the existing PAYE system.

1.4 The amendments also standardise and simplify the withholding machinery rules. Each of the existing 9 withholding systems contains its own set of machinery rules about matters such as remitting and reporting amounts withheld. The amendments standardise and simplify these rules by replacing them with a single set of common machinery rules which will support both current and new withholding arrangements.

1.5 The amendments further simplify the law by writing the new PAYG withholding system, according to TLIP drafting methods.

1.6 The amendments will also achieve flexibility and will be more readily adaptable to changes in our evolving economic circumstances than the current withholding systems.

1.7 The amendments in this Bill do not include recovery, procedural and evidentiary provisions to facilitate the Commissioner recovering debts under the new PAYG withholding system. These amendments will be introduced in a later Bill as generic recovery rules for those debts and debts arising under other Acts administered by the Commissioner. That Bill will also contain amendments detailing the reporting requirements of withholders to the Commissioner. The amendments in this Bill only deal with the reporting requirements of withholders to payees.

Date of effect

1.8 The amendments to introduce the new PAYG withholding system will apply to payments made on or after 1 July 2000. [Item 3 of Part1 of Schedule 1]

1.9 The PAYE, PPS, RPS and other existing withholding systems will not apply to payments made on or after 1 July 2000. [Items 11 to 14, 22to 25, 30 to 47 in Part 2 of Schedule 1]

Background to the legislation

1.10 The income tax law presently has 9 systems under which amounts are withheld from income payments and remitted to the Commissioner. The systems are:

the PAYE system, PPS and RPS;
withholding where no TFN is quoted on investments;
withholding from natural resource payments to non-residents;
withholding from certain withdrawals from Australian Film Industry Trust Fund Accounts;
withholding from repaid FMDs;
the collection of withholding tax which applies to dividends, interest and royalties paid to non-residents; and
the collection of mining withholding tax which applies to payments for mining on Aboriginal land.

1.11 Except for the 2 withholding tax systems, the amounts withheld from payments of income are not a final tax liability. They are generally applied as a credit against income tax payable for the income year in which the income is received.

Evolution of current withholding and reporting systems

1.12 In the past, as the need for a new withholding or reporting system has arisen, a separate legislative structure has been created and added to the existing withholding arrangements in Part VI of the ITAA 1936. Each new withholding system has been allocated its own Division or Subdivision within that Part.

1.13 Recent examples of this are the PPS, RPS and FMD scheme. The practice has been that each new system added to Part VI of the ITAA 1936 has included its own discrete set of machinery rules. These rules serve a similar or identical purpose to machinery rules already contained in all or many of the pre-existing withholding systems.

1.14 For example, in addition to containing distinct rules defining when a withholding is to occur and setting out the applicable rate of withholding, the existing systems have their own supporting machinery rules about matters such as:

variations in the amount to be withheld from payments and remitted to the Commissioner;
the timing of remittances;
evidentiary matters in relation to recovery of unremitted amounts;
allowing credits for amounts withheld; and
recovery of amounts by the Commissioner.

1.15 As a result of this practice, a high degree of unnecessary repetition has been progressively introduced into the law.

1.16 The new withholding amendments will replace this repetition with a single set of common machinery rules to be shared by current and future withholding arrangements.

Inefficient and outdated withholding arrangements

1.17 As explained in the paragraphs below, there is a need to update the 3 current withholding and reporting systems (PAYE, PPS and RPS) which are intended to cover withholding from certain payments for work or services.

The PAYE system

1.18 The core withholding system the PAYE system relies on ideas of salary or wages, employee and employer to define its scope. The definition of salary or wages extends the scope of the PAYE system well beyond salary or wages paid to common law employees.

1.19 For example, payments made under contracts which are wholly or principally (more than 50%) for the labour of a payee, who is not a common law employee of the payer, are defined to be salary or wages under paragraph (a) of the definition of salary and wages in subsection 221A(1) of the ITAA 1936. Further, the payers and recipients of such payments are labelled employers and employees for PAYE purposes.

1.20 References to contracts wholly or principally for labour in paragraph (a) were intended to extend the scope of the PAYE system beyond traditional employer/employee arrangements to take in some independent contractors who principally provide their own labour to meet obligations under a contract.

Problems with paragraph (a) of the definition of salary or wages

1.21 Paragraph (a) has been in the law since 1941. Since then, there have been a number of cases [F1] where the Commissioner has been unsuccessful in arguing that the paragraph applies to individual contractors.

1.22 Amendments were made in 1983 to clarify that a contract wholly or principally for labour for PAYE purposes includes the:

performance of labour even though a right existed under the contract to delegate the work (paragraph 221A(2)(b) of the ITAA 1936); and
rendering of services, or performance as a musician, entertainer or other person of creative talent (paragraph 221A(2)(c) of the ITAA 1936).

1.23 In World Book (Australia) Pty Ltd v FC of T (1992)
27 NSWLR 377 , the Supreme Court of NSW Court of Appeal viewed contract arrangements involving an encyclopaedia salesperson as a contract to produce a result, rather than a contract wholly or principally for the labour of the salesperson. This meant the payments to the salesperson were not subject to PAYE.

1.24 The potential application of paragraph (a) is narrow and there is uncertainty as to what payments it covers. The concepts underlying paragraph (a) will not be part of the new PAYG withholding system. The new system will contain more flexible withholding arrangements to cover payments for work or services.

Other payments treated as salary or wages

1.25 The current definition of salary or wages in subsection 221A(1) of the ITAA 1936 also deems the recipients of many other payments to be employees for PAYE withholding purposes. These payments include:

remuneration to company directors and statutory office holders;
pensions, annuities and eligible termination payments;
Commonwealth education or training payments; and
certain compensation, sickness or accident payments.

1.26 The new PAYG withholding system will avoid the misuse of common terms so that an employer or employee label will only apply to employers and employees at common law. The system will continue to cover the above payments and refer to them as they are rather than defining them as salary or wages. In general, where the new PAYG withholding system refers to the payments it covers, these will be referred to as withholding events.

The PPS and RPS systems

1.27 The PPS and RPS systems currently apply to work or services in certain prescribed industries and have been essential in maintaining the integrity of the current tax system in relation to income from work. However, the Government recognises that both systems add significant compliance costs in industries where they apply and would impede a smooth transition to a GST.

1.28 The PPS and RPS systems apply to business transactions and any interaction between these systems and the proposed GST would complicate those transactions, if a withholding obligation continued to apply.

1.29 These systems will not apply to payments from 1 July 2000. Taxpayers currently covered by PPS or RPS will generally meet their tax obligations by paying quarterly instalments of income tax under the PAYG instalment arrangements, unless they are covered by one of the 3 withholding events for work or services which have no current equivalent.

1.30 The new PAYG withholding system will contain, as one of 3 new cases where withholding applies, a mechanism whereby payments for work or services can be specified in regulations as being subject to withholding. Only one category of these payments a payment to a worker from a labour hire firm, for work performed for a client of the labour hire firm will initially be in the PAYG law. New categories will be added by regulation, but this will only occur after appropriate consultation.

1.31 The other 2 new cases when withholding will apply will cover:

payments for work or services where businesses and workers voluntarily agree that withholding will occur from payments made; and
payments requested on an invoice that does not include quotation of an ABN.

1.32 All 3 cases are explained in the Explanation of Amendments below. The new arrangements involving voluntary agreements are similar to those recently introduced into the PPS.

Anticipating tax reform

1.33 From 1 July 1998, new Division 1AAA in Part VI of the ITAA 1936 has combined the PAYE, PPS and RPS remittances for large, medium and small remitters. Recent amendments to Division 1AAA ensure that, from 1 July 1999, medium and small remitters make their remittances not later than the 21st day after the month (for medium remitters) or quarter (for small remitters) in which amounts are withheld.

1.34 This alignment of dates to the 21st of a month was in anticipation of the new Tax Reform arrangements under which most businesses will complete a single compliance or activity statement by the 21st of each quarter for the purposes of meeting their various tax obligations.

Standardisation and removing complexity

1.35 Although some of the machinery rules referred to above are reasonably standard across the 9 withholding systems there are differences in other rules, such as the variation of the amount of instalments and when amounts must be remitted.

1.36 As part of the current review of business taxation, Chapter 3 of the Review of Business Taxation discussion paper A Strong Foundation , released in November 1998, explored the problem of complexity in the current taxation law. As a case study, the discussion tracked the respective payments in 8 of the 9 withholding systems through the various stages leading to remittance to the Commissioner. Features such as variations, exemptions and refunds of amounts withheld were examined.

1.37 The discussion concluded that:

If a single set of rules had been uniformly applied, rather than each of these systems of withholding having a separate set of rules designed for them, the resultant system would be far simpler
A standardised withholding system could leave in place different withholding bases. If they serve separate policy needs, they will still do so once collection, variation, exemption and refund are simplified into a single system.

1.38 The amendments to achieve that outcome through one PAYG withholding system are explained below.

Explanation of the Amendments

1.39 The main objectives of the PAYG withholding amendments in this Bill are to:

introduce 3 new withholding events to provide more certainty about which payments made by business for work or services are to be subject to withholding;
standardise and simplify the elements of the current withholding arrangements which are to become part of the new PAYG withholding system from 1 July 2000; and
make the necessary transitional and consequential amendments to ensure that the new PAYG withholding system interacts with other legislation and applies as intended.

1.40 This Explanation of the Amendments is in the following 4 Sections:

Section 1
New cases where withholding is required
Section 2
The new PAYG withholding system
Section 3
Consequential amendments and application provisions
Section 4
Finding tables

1.41 Where not specifically stated, legislative references throughout this Chapter (eg. new Divisions, sections, subsections and paragraphs) in relation to the new PAYG withholding system are references to provisions in new Part 2-5 of Schedule 1 to the TAA 1953.

Section 1 - New cases where withholding is required

1.42 As explained in the Overview and Background to this Chapter, existing withholding systems will be either:

closed down from 1 July 2000 (PAYE, PPS, RPS);
removed from the existing withholding provisions because they are no longer operative (Film Industry Trust Accounts) or because they are being moved to the new PAYG instalments system (FMDs); or
included in the new PAYG withholding system. This category will include payments under existing withholding systems and payments to employees and other individuals (eg. office holders) within the existing PAYE arrangements.

1.43 The new PAYG withholding system will introduce 3 new withholding cases which will cover payments:

for work or services under labour hire arrangements or as specified in regulations [new section 12-60] ;
for work or services where an entity and an individual agree that withholding will occur [new section 12-55] ; and
for a supply (for GST purposes) made by the payee where the payees ABN is not quoted on an invoice relating to the supply [new section 12-190] .

1.44 Further, the existing TFN withholding event for investments where a payees TFN is not quoted will also be modified to ensure that withholding is not required where the payees TFN or ABN is quoted. [New sections 12-140 and 12-155]

1.45 These 3 new withholding events and the extension to the current rules covering the quotation of TFNs in relation to certain investments are explained in the following paragraphs.

Payment under a labour hire arrangement, or specified by regulations

1.46 This new event provides for withholding by a labour hire firm from payments it makes to individuals which are for work or services and made under a labour hire arrangement or specified in regulations. Specifying payments in regulations will provide flexibility to extend the categories of payments for work or services to be subject to withholding under this event. [New section 12-60]

1.47 Any new categories of payments to be added by regulation under this new withholding event will only occur after appropriate consultation.

1.48 A labour hire arrangement is described, for withholding purposes, in new paragraph 12-60(a) , as one where an end user of labour engages an individual to perform work or services through an intermediary (a labour hire firm). In practice, the labour hire firm contracts with the individual and pays the individual to provide the end user with work or services.

1.49 This new event, which only applies when the individual is not an employee of either the labour hire firm or the end user, will ensure that withholding specifically applies to these arrangements. The event will address the current uncertainty which exists in relation to applying the current withholding system to labour hire arrangements. The general description of the payment by reference to the nature of the arrangement, rather than by specifically referring to labour hire arrangements, ensures that the operation of this event will not be avoided through argument that a labour hire firm as such, is not a party to the arrangement.

1.50 Withholding will not be required where the whole of the payment is exempt income of the recipient. This is because no tax is payable by the individual on these amounts. [New subsection 12-1(1)]

Voluntary agreement to withhold

1.51 This new event will provide added flexibility to meet the needs of businesses and their individual workers. The event covers arrangements, which wholly or partly involve the performance of work or services and which are not otherwise in the new withholding system. [New paragraphs 12-55(1)(a) and (b)]

1.52 Under this event, entities and individuals must agree that withholding will be made from payments. The agreement must be in an approved form as specified in section 995-1 of the ITAA 1997. The recipient of the payment must also have an ABN. This requirement will ensure that payees, who would otherwise be covered by the new instalment system as business taxpayers, will be covered by withholding. [Item 9 of Schedule 3; new paragraphs 12-55(1)(c) and (d)]

1.53 Both parties to the agreement are required to keep a copy of the agreement while the agreement is in force and for 5 years after the last payment is made under the agreement. To reduce compliance costs, there is no requirement for the agreement to be lodged with the Commissioner. The 5 year record keeping requirement is consistent with the general record keeping requirements, in section 262A of the ITAA 1936. [New subsection 12-55(2)]

1.54 Because of the voluntary nature of this withholding event, the new provision allows either party to terminate the agreement by giving notice to the other party in writing. [New subsection 12-55(3)]

1.55 The general exception provision for exempt income applies to this withholding event. That is, the business making the payment will not be required to withhold an amount where the whole of the payment is exempt income of the individual worker. [New subsection 12-1(1)]

Interaction with the GSTA 1999

1.56 Payments for work or services which are covered under the new PAYG withholding system will generally be excluded from the definition of enterprise in subsection 9-20(2) of the GSTA 1999. Consequential amendments, which are explained in Section 3 of this Chapter, are being made to the GSTA 1999 to generally exclude payments for work or services under the new PAYG withholding system. [Items 50 to 52 in Part 2 of Schedule 1]

1.57 Payments under new section 12-55 will generally be excluded from the GSTA 1999 through consequential amendments (also explained in Section 3 ) to the definition of supply . The exception to this general rule will be situations where the payer is not entitled to an input tax credit for the supply. [Items 53, 54 and 64 in Part 2 of Schedule 1]

No ABN withholding event

1.58 This new withholding event provides that a payer must withhold from a payment for a supply in the course of the recipients enterprise where an invoice or some other document relating to the supply does not quote the recipients ABN. The terms supply and enterprise are as defined in the GSTA 1999. [New subsections 12-190(1) and (2)]

1.59 This new withholding event is a compliance measure to ensure that entities, especially those who are not required to be registered for GST, do not avoid their taxation obligations by requesting cash payments.

1.60 Unlike the new withholding events discussed above and the current PAYE coverage which will become part of the new PAYG withholding system, this event can apply to payments made to an entity (eg. an individual, a partnership, company or trust). The event will also apply where a payer has reasonable grounds to believe that the recipient is using a number that is not the recipients ABN. [New paragraph 12-190(3)(c)]

1.61 Businesses will generally provide an ABN on an invoice. Failure to provide an ABN will indicate that the payee is not in business and is more appropriately covered by the PAYG withholding system. These payees will be subject to withholding at the top marginal rate and Medicare levy (currently 48.5%).

1.62 This new rule, like the new labour hire arrangement rule, will address current uncertainty for businesses in deciding whether the service provider is a business, an employee or an independent contractor. This uncertainty as to whether or not withholding should apply has caused considerable difficulty in correctly applying the current law.

1.63 The exceptions to this event are generally consistent with those exceptions for the other withholding events, operating where the payment is not taxable in the hands of the payee. There are also a number of specific exclusions to this event. Withholding will not be required where the payment does not exceed the threshold below which a tax invoice cannot be required. This threshold is $50 or a higher amount specified in the GST regulations for the purposes of subsection 29-80(1) of the GSTA1999. In addition, the event will not apply where the no TFN on investments event applies, as the no TFN event similarly achieves the compliance assurance outcome that is desired. [New paragraphs 12-190(4)(a) and (b) and subsection 12-190(5)]

1.64 In order to complement the ABNA 1999, withholding under this event will not be required where the supply involves activities done by a member of a local governing body as these persons are not eligible for an ABN under the ABNA 1999. [New paragraph 12-190(4)(c)]

1.65 Also, withholding is not required under the no ABN event where the payee is an individual and gives a statement that the supply is:

an activity done as a private recreational pursuit or hobby; or
wholly of a private or domestic nature for the payee.

1.66 This rule supplements the exclusion of payments that are wholly of a private or domestic nature in order to exclude from withholding those amounts that are not subject to income tax. However the exclusion will not apply if the payer has reasonable grounds to believe that the statement is false or misleading in a material particular (ie. it is intended only to avoid withholding). [New paragraph 12-190(4)(a) and subsection 12-190(6)]

Extension to existing TFN withholding for investments no ABN

1.67 In the current law, Part VA and Division 3B of Part VI of the ITAA 1936 form a withholding system under which an investor may quote their TFN to their investment body in relation to certain investments which are described in Part VA. The current law requires that, where a TFN is not quoted, an amount is to be withheld at the top marginal rate plus Medicare levy (currently 48.5%) from any income on the investment.

1.68 New sections 12-140 and 12-145 carries forward this requirement to withhold to the PAYG withholding system. However, recognising that some investments are held in a business capacity, the event extends the current requirements so that a business may quote either an ABN or a TFN to avoid withholding.

1.69This extension is achieved through new section 12-155 which provides an exception to the requirement to withhold an amount under new sections 12-140 and 12-145 if the investment is made in the course or furtherance of an enterprise carried on in Australia, and the investor has quoted their ABN to the investment body. A sole trader may only quote their ABN in relation to their business bank accounts (ie. where the income from the investment will be properly returned as part of business receipts), and not in relation to their personal accounts.

Section 2 - The new PAYG withholding system

1.70 The explanation for the amendments to introduce the new PAYG withholding system is provided in the following Parts:

Part 1
Structure, Scope, Rates of Withholding, Interpretation, Finding Tables
Part 2
Machinery Provisions to support PAYG withholding system
Part 3
Transitional Arrangements for 2000-2001 financial year
Part 4
Changes to current arrangements and terminology
Part 5
Crediting rules, reviewable decisions, payment summaries, offences.

part 1 - Structure, Scope, Rates of Withholding, Interpretation, Finding Tables

Structure

1.71 The various elements of the new PAYG withholding system are in the following Divisions in New Part 2-5 of Schedule 1 to the TAA 1953:

Division - Subdivision Element
10 Guide to Part 2-5
11 Preliminary matters
12 Payments from which amounts must be withheld
          12-A General Rules
          12-B Payments for work and services
          12-C Retirement payments, eligible termination payments and annuities
          12-D Benefit and compensation payments
          12-E Payments where TFN or ABN not quoted
          12-F Dividend, interest and royalty payments
          12-G Payments in respect of mining on Aboriginal land, and natural resources
14 Non-cash benefits for which amounts must be paid to the Commissioner
16 Payers obligations and rights
          16-A To withhold
          16-B To pay withheld amounts to the Commissioner
          16-C To provide information
          16-D Additional rights and obligations of entity that makes a dividend, interest or royalty payment
Recipients entitlements and obligations 18
          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 Recipients obligations
20 Other matters
          20-A How this Part applies to certain entities
          20-B Offences
          20-C Commissioners power to obtain information and evidence
          20-D Review of decisions

1.72 New Division 12 groups the different withholding events for the purposes of the withholding provisions and to assist the reader in interpreting those provisions. These groupings are not intended to have any implications for other areas of the law. For example, they are not intended to have any implications for determining whether a benefit is taxable under the fringe benefits tax law.

1.73 The new standardised legislative provisions supporting the PAYG withholding system are expressed differently to the numerous provisions they replace. Subject to certain exceptions discussed later in this Chapter, this different expression is not intended to change the application or effect of the current law.

Scope of new PAYG withholding system

1.74 As discussed in the Background to the legislation , the scope of the new PAYG withholding system as described in new Division12 will include the new withholding events discussed above as well as existing withholding arrangements for:

most individuals (eg. employees and office holders) currently covered by the PAYE system; [new Subdivisions 12-A, 12-B, 12-C and 12-D]
the collection of withholding tax from payments of dividends, interest or royalties to non-residents [new Subdivision 12-F] ;
the collection of mining withholding tax [new section 12-320] ;
withholding from natural resource payments to non-residents [new section 12-325] ; and
withholding where a TFN has not been quoted to an investment body [new sections 12-140 and 12-145] .

1.75 The scope of the new PAYG withholding system covers 24 different withholding events which are summarised in the table in new section10-5 .

Rates of Withholding

1.76 New section 16-10 provides that an amount to be withheld from a payment under the new PAYG withholding system is to be worked out under the regulations. The only exception is for natural resource payments to non-residents where the rate of withholding is set by the Commissioner. Amounts to be withheld from payments for work or services in new Subdivision 12-B , including payments under voluntary agreements and labour hire arrangements, will be determined like the current PAYE amounts (ie. progressive rather than flat rates) having regard to marginal tax rates. [New section 12-325]

1.77 Under new section 16-15 , variations to the amounts to be withheld will be possible where special circumstances exist. Special circumstances will usually only arise where the payees final liability for all income types for that year does not justify the standard withholding rate.

Interpretation

1.78 There are matters and rules which provide interpretative support to new Subdivisions 12-B to 12-G which describe the withholding events in the new PAYG withholding system.

Preliminary matters constructive payments

1.79 For the purposes of PAYG withholding, new subsection 11-5(1) provides that an entity will be taken to have paid an amount to another if the amount is applied or dealt with on the others behalf, or as the other directs. For example, an employer will be treated as paying an amount to an employee if the employer, at the employees direction, pays the amount to a health fund to meet the employees liability to pay health insurance contributions to the fund.

1.80 Four existing withholding systems have an express rule to this effect. The other withholding systems are applied as containing a constructive payment principle. Consequently, there will be no change in administrative practice.

1.81 New subsection 11-5(2) provides a complementary rule which will ensure that an amount is taken to be payable by an entity to another if the entity is required to apply or deal with it in any way on the others behalf, or as the other directs. The provision is only relevant to rules depending on an amount being payable. For example, a lenders obligation under new section 12-260 to notify a borrower where the borrower pays interest in Australia that is derived by the lender in carrying on business through a permanent establishment outside Australia.

1.82 The provision does not result in any obligations to withhold because those obligations depend on an amount being paid, or in one case present entitlement to a share of income.

1.83 New section 11-5 does not exclude any principles of constructive payment or entitlement which extend beyond the rules in the section.

General rules

1.84 New Subdivision 12-A contains general rules on non-cash benefits, priority of events, expressing amounts in Australian currency and general exceptions which are discussed below.

Non-cash benefits and priority rules

1.85 New section 12-10 provides that new Division 12 does not extend to non-cash benefits as these benefits are afforded special treatment in new Division 14 .

1.86 New subsection 12-5(1) makes clear that if the particular circumstances of a payment result in more than one withholding event applying to that payment, only one amount is to be withheld. The general priority rule, which is in new subsection 12-5(2) , provides that the amount should be withheld under the provision which is most specific to the circumstances of the payment. This general rule is subject to specific priority rules contained in the table in new subsection 12-5(2) .

1.87 In addition to the general priority rules explained above, other sections have self-contained priority rules. For example, new subsection 12-190(5) makes clear that new section 12-140 has priority over the new no ABN event. It also ensures that if the quotation of a TFN prevents new section 12-140 from applying to a payment, then the no ABN event cannot then apply to that payment.

1.88 Another example of a self-contained priority rule is in new paragraph 12-55(1)(b) which provides that withholding under the voluntary agreement event can only take place if the relevant payment is not subject to any other withholding event.

1.89 Further, if a payment is subject to dividend, interest and royalty (DIR) withholding, there can be no withholding from the payment under most of the new withholding events. This is because section 128D of the ITAA 1936 and subsection 6-20(2) of the ITAA 1997 apply so that income subject to DIR withholding is exempt income. Most of the withholding events (eg. a payment for a supply where the payee does not quote its ABN) do not apply to exempt income.

General exceptions and expressing amounts in Australian currency

1.90 New section 12-1 summarises the withholding events where withholding is not required in relation to exempt income, payments of living-away-from-home allowance and expense payment benefits under the FBTAA 1986.

1.91 The exception for expense payment benefits clarifies that reimbursements of the expenses of employees, office holders and directors are not subject to withholding. They may be taxable under Division 5 (expense payment fringe benefits) of Part III of the FBTAA 1986. The exception does not apply to payments for car expenses based on distance travelled (commonly called cents per kilometre reimbursements). Those payments are exempt from fringe benefits tax but are assessable income under paragraph 26(eaa) of the ITAA 1936 or as ordinary income.

1.92 The existing withholding provisions have no specific rules about foreign currency transactions. Furthermore, it is unclear how the general provision about foreign currency transactions in section 20 of the ITAA 1936 applies to obligations under the withholding provisions.

1.93 New section 12-15 clarifies that payments in a foreign currency must be expressed in Australian dollars based on the exchange rate when the amount must be withheld. Thus, currency fluctuations that happen after the time when the amount must be withheld do not affect the amount which the withholder must pay to the Commissioner.

Finding tables

1.94 Detailed finding tables are located in Section 4 . These finding tables relate the rewritten standardised provisions in the new law to the current provisions in the withholding systems which will form part of the new PAYG withholding system. The finding tables should also assist in understanding the basis for new provisions which are not given separate explanations in this Chapter.

Part 2 - Machinery provisions to support PAYG withholding system

1.95 This Part provides background and some explanation for the machinery provisions being used to support the new PAYG withholding system. Some provisions are common to all withholding systems while others only apply to some systems. Finally, there are provisions adopted (eg. status of withholder) which currently apply for remittances of withheld amounts under PAYE, PPS and RPS and which will be used for all remittances.

Machinery provisions common to current system

1.96 Many of the current machinery rules about matters such as paying withheld amounts to the Commissioner and advising the Commissioner of withholding liabilities are similar if not identical under each of the current withholding arrangements.

1.97 Rather than repeating these rules for each withholding event, the new law contains a single standardised version of each rule which can be shared by:

the existing withholding arrangements which will continue from 1 July 2000;
the withholding events which will apply to most people currently within the PAYE arrangements; and
the 3 new withholding events.

1.98 The introduction of these generic machinery rules enables the new law to avoid much of the repetition and complexity contained in the existing law. The generic nature of these rules will also enable them to support any future withholding events.

1.99 Table A below sets out the machinery rules that are currently contained in all the existing withholding arrangements which will continue to operate after 1 July 2000 as part of the new PAYG withholding system. The existing provisions and the new standardised provision, are also referred to in the Table.

Table A
Topic Current Provisions in ITAA 1936 New Standard Provision
DIR No TFN and NRP MWT PAYE
Failure to withhold offence 221YL(4A) & (4B) 221YHZC(1A) & (2) 221ZB(2) & (3) 221C(1A) 16-25
Failure to withhold penalty amount 221YQ(1) 221YHZD(2) 221ZD(1) 221EAA(1) 16-30, 16-35, 16-40 and 16-50
Payer must pay withheld amounts to ATO 221YN(1) 221YHZD(1A) 221ZC(1) 220AAE(1) 220AAM(1) 220AAR(1) 16-70
Failure to pay on time 221YN(4) 221YHZD(2) 221ZC(5) 220AAE(3) 220AAM(3) 220AAR(3) 16-80
Duty to notify of amount withheld 221YN(2) 221YHZCA(1) 221ZC(2) 220AAGA(1) 220AAOA(1) 220AATA(1) 16-150(1)
Failure to notify penalty 221YN(2A) 221YHZCA(2) 221ZC(2A) 220AAGA(2) 220AAOA(2) 220AATA(2) 16-150(2)

Machinery provisions NOT common to current systems

1.100 There are a number of other situations where machinery provisions are:

present in some but not all of the existing withholding arrangements; or
present in all of those arrangements but different for each one.

In order to achieve a PAYG withholding system which applies consistently to all withheld amounts, a standardised provision has also been adopted for those situations.

1.101 Table B below summarises the majority of situations, the current provisions and the proposed standardised provision.

Table B
Topic Current Provisions in ITAA 1936 New Standard Provision
DIR No TFN &/or NRP MWT PAYE
Time of withholding 221YL(1), (2), (2A), (2B), (2G), (2H) 221YHZA(1) & (1A) 221ZB(1) 221C(1A) 16-5
How much to withhold As above 221YHZC(1C) & 221YHZB(1) 221ZB(1) 221C(1) 16-10
Variation of amounts to be withheld 221YM(b) No provision No provision 221D 16-15
How amounts must be paid to the Commissioner No provision No provision No provision 220AAE, 220AAN, 220AAS 16-85
Application to partnerships No provision 221YHZN No provision 220AAZD 20-5
Application to unincorporated companies No provision No provision No provision 220AAZE 20-10
Joinder of Charges 221YY No provision 221ZL 221W 20-40
Payer protected from civil action 221YV 221YHZH 221ZH No provision 16-20
Information gathering powers No provision 221YHZO No provision 221YAA 20-60
Review of decisions No provision 221YHZM No provision 221N(4) & 221EDC 20-80
Non-cash benefits 221YL(4) 221YHZC(1B) & (1E) No provision No provision 14-5 and 14-10
Refunds of excess withheld amounts No provision 221YHZDA & YHZDAA No provision No provision 18-65 and 18-70

1.102 While the new withholding system has expanded the rules in Table B into standard provisions capable of applying to all withholding events, some of these provisions will not always be applicable or relevant to a particular event.

1.103 For example, the ability of the Commissioner to vary the rate of withholding under new section 16-15 will not apply to an investor who has not provided a TFN under new sections 12-140 and 12-145 because the rate of withholding for that event is a sanction rate. Furthermore, new section 16-15 will generally not be relevant to the NRP event. This is because under that event the Commissioner sets the rate of withholding on a case by case basis and is able to take into account any special circumstances affecting the recipient as part of that process. Specific explanation is provided below for the standard provisions covering non-cash benefits and refunds of excess withheld amounts.

Provisions for non-cash benefits

1.104 In order to address situations where withholding obligations can be avoided through the payment of non-cash benefits, new Division 14 contains provisions which, when applied to non-cash benefits, will achieve similar outcomes to those which would result if money rather than benefits were paid.

1.105 In the existing law, only 2 withholding systems, the no TFN on investments and DIR withholding systems contain provisions explaining how to treat non-cash payments. The no TFN on investments system requires an investment body to pay an amount to the Commissioner equal to the amount that would have been deducted if the payment had been in cash (subsection 221YHZD(1B)). The DIR system has a similar rule. Under the no TFN system the investment body is able to recover the amount it has paid to the Commissioner from the payee (subsection 221YHZD(1C)).

1.106 New section 14-5 in the PAYG withholding system is modelled on the no TFN on investments provision discussed above. The new provision is based on the assumption that an entity making a non-cash payment to a recipient has instead made a cash payment to that recipient. The amount paid is equal to the market value of the non-cash benefit provided, when it is provided. Payers are required to pay to the Commissioner, before providing the benefit, an amount equal to an amount that would have been withheld if the non-cash benefit had been made in cash. The amount withheld is called the notionally withheld amount .

1.107 New section 14-10 contains a similar rule where an entity in Australia receives, in a non-cash form, a dividend, interest or a royalty for a non-resident.

1.108 New section 14-15 will allow the payer to recover the notionally withheld amount from the payee. This ensures that the net amount of the payment made by the payer is equal to what it would have been if the payment had been in money.

1.109 The payer may also set off the whole or part of the payees debt against any amount that is, or becomes, due and payable by the payer to the payee. This right to offset will assist payers to recover an amount owed by payees that has been paid to the Commissioner. To the extent such offsetting occurs, the debt of the payee is satisfied. [New subsection 14-15(3)]

Refund of excess withheld amounts

Outline

1.110 The current no TFN withholding arrangements contain rules allowing amounts withheld in error to be refunded to recipients. The rules are in sections 221YHZDA and 221YHZDAA of the ITAA 1936. The new withholding arrangements include generic equivalents to these rules which will enable amounts withheld in error under any withholding arrangement to be refunded to recipients. The new rules will also enable amounts erroneously paid to the Commissioner in respect of non-cash benefits to be refunded. [New sections 18-65 and 18-70]

1.111 The new law maintains the special refund rules for:

situations where an exemption has not been claimed under the no TFN system (subsection 221YHZDB(1)) [new section 18-80] ; and
situations where a refund is claimed because ETP amounts have been rolled over (subsection 221H(5A)) [new section 18-75] .

Refunds from payers

1.112 New section 18-65 allows for an amount that has been withheld under new Division 12 , or paid to the Commissioner under new Division 14 , in error to be refunded by the payer to the recipient. This refund mechanism applies to amounts withheld or paid under any withholding arrangement.

1.113 A withheld amount or an amount paid to the Commissioner under new Division 14 must be refunded by the payer to the recipient if the amount was withheld or paid in error and either:

the payer discovers the error; or
the recipient applies to the payer for a refund on the basis of the error;

by the 21st of July in the financial year after the financial year in which the amount was erroneously withheld or paid. This varies slightly the refund rule existing under the current no TFN system where the relevant date is the 16th of July.

1.114 An example of where an amount could be withheld in error is where an investor quotes his or her TFN to an investment body and that body fails to record the number, and later withholds from a payment of investment income under new section 12-140 .

1.115 An amount can also be withheld due to an error on the part of the payee. An example of this would be where an investor is entitled to give an investment body a declaration under Division 5 of Part VA of the ITAA 1936 in relation to an investment but fails to do so. Because a declaration has not been given to the investment body by the investor, and the investor has not otherwise quoted its TFN to the body, the body withholds an amount from income it pays to the investor. In this case the amount has been withheld due to an oversight on the part of the investor and the investor will be entitled to seek a refund of the amount withheld under new section 18-65 .

1.116 Under new subsection 18-65(1) an erroneously withheld amount can be refunded regardless of whether it has been paid to the Commissioner. Under the current no TFN on investment rules, an amount withheld in error can only be refunded if it has already been paid to the Commissioner refer to paragraph 221YHZDA(1)(b) of the ITAA 1936.

1.117 New subsection 18-65(6) allows a payer who has refunded an amount to a recipient under new subsection 18-65(1) to offset the whole or part of the refunded amount against other amounts to be paid to the Commissioner under the withholding arrangements. However this can only take place if the amount refunded has previously been paid to the Commissioner new paragraph 18-65(6)(d) . A payer that does not decide to offset is entitled to recover the refunded amount from the Commissioner under new subsection 18-65(5).

1.118 Where an amount has been withheld due to an error involving the quotation of a recipients TFN or ABN, the payer may request under new subsection 18-65(3) the provision of the recipients TFN or ABN before refunding the amount. This provision will enable payers to correct their records before refunding an amount withheld in error, thereby reducing the risk of future errors. If the recipient does not provide their TFN or ABN to the payer, the payer is not required to refund the amount under new subsection 18-65(1) .

1.119 If a recipient does not apply for a refund by the 21st of July following the financial year in which the amount was withheld, and the payer does not otherwise become aware by that date that an amount was withheld in error, new section 18-65 will no longer apply. In such a case, the recipient will be entitled to claim a credit on assessment for the amount withheld in error (as is the case for amounts correctly withheld new subdivision 18-A ) or, if that is not appropriate, the investor can apply to the Commissioner for a direct refund of the amount under new section 18-70 .

Refunds from the Commissioner

1.120 New subsection 18-70(1) enables a recipient to apply to the Commissioner for a direct refund of an amount withheld in error where the recipient did not apply to the payer for a refund by the 21st of July in the relevant year, or the payer did not otherwise become aware of the error by that date. To be able to seek a refund from the Commissioner the amount withheld in error must already have been paid to the Commissioner by the payer.

1.121 Under new subsection 18-70(2) , the Commissioner is required to refund the amount if the application contains specified information and the Commissioner is satisfied that it would be fair and reasonable to do so.

1.122 In considering whether it would be fair and reasonable to refund the amount under new subsection 18-70(2) the Commissioner may have regard to the factors listed in that subsection and to matters such as whether:

it is unlikely that the recipient will become entitled to a credit for the erroneously withheld amount before the end of the financial year after the one in which the amount was withheld; or
the recipient will suffer hardship if the Commissioner does not refund the amount.

1.123 The first of these matters relates to situations where a person would not otherwise need to lodge an income tax return (for example a company or individual that has been granted exemption from lodging an income tax return) or is unable to lodge before the end of the financial year (for example because of a delay in receiving information from overseas). The second matter relates to cases where, for example, a person depended on using the full amount of income from which an amount had been erroneously withheld to pay their immediate living expenses.

1.124 A person dissatisfied with a decision of the Commissioner not to refund an amount can object against the decision in the manner set out in Part IVC of the TAA 1953. [New section 20-80; table item 65 and 70]

Other machinery provisions When and how withheld amounts must be remitted

1.125 Division 1AAA of Part VI of the ITAA 1936 contains rules about remitting PAYE, PPS and RPS amounts to the Commissioner. Under those rules, the timing and method of remitting those amounts depends on whether a withholder is large, medium or small. These categories depend on the level of those remittances over a financial year.

1.126 Under the new PAYG withholding system, a withholders status for a month will be determined under new sections 16-95, 16-100 and 16-105 by using the same threshold remittances in Division 1AAA and having regard to remittances under all withholding events. New sections 16-110 and 16-115 , which deal with variations to status, generally reflect the current provisions in Division 1AAA referred to above.

1.127 Special transition rules in new sections 16-120 to 16-135 , which cover timing of remittances and status for withholding purposes, will apply for the year commencing on 1 July 2000 to assist withholders whose arrangements are such that remittances under different withholding systems are administered separately. These transition rules are explained in Part 3 of this Section.

1.128 Table C below summarises the operation of the new provisions covering status, timing and method of payment under the new system. The Table also contains the new sections covering those features.

Table C - Status, timing and payment method
Withholders status Basic thresholds Due date for payments Method of payment
New section 16-75 New section 16-85
Large (1) total amount of withholding remittances for a year in excess of $1million; If withholder withholds on: Withholder must pay by: Electronic payment
Saturday or Sunday The second Monday after that day
(2) part of a company group for which total amount of remittances exceeds the $1 million threshold; Monday or Tuesday The first Monday after that day
Wednesday The second Thursday after that day
(3) payer is a large withholder for June2001; or Thursday or Friday The first Thursday after that day
(4) the Commissioner determines that payer is a large withholder under new section 16-115 . New section 16-95
Medium (1) total amount of withholding remittances for a year of between $25,000 and $1million [new section 16-100] ; or Payment due by the 21st day after the end of the month in which the amount was withheld. Electronic payment or other means approved by the Commissioner
(2) the Commissioner has given a notice to the person under [new sections 16-110 or 16-115] requiring the person to be a medium withholder.
Small a person is a small withholder if they are not a medium or large withholder. New section 16-105 or 16-110 Payment due by the 21st day after the end of the quarter in which the amount was withheld. Electronic payment or other means approved by the Commissioner

1.129 If the day for payment falls on a weekend or a holiday, the payment must still be made by that day. Subsection 36(2) of the Acts Interpretation Act 1901 does not apply to extend the due date to the next working day.

Part 3 - Transitional arrangements for 2000-2001

1.130 This Bill contains a number of special rules for managing the transition from the current withholding systems to the new PAYG withholding system. For example, large, medium and small withholders under Division 1AAA of Part VI of the ITAA 1936 will be allowed a 12month phase-in period before their withholding status is determined under new sections 16-95 to 16-105 having regard to all remittances under the new system. These transition rules, which are contained in new sections 16-125 to 16-135 , are summarised in Table D below.

Table D - Transitional Arrangements
Withholder status Status under current rules in ITAA 1936 Status under new withholding system
Large Payer is classed as a large remitter for June 2000 under section 220AAB. Payer will be classed as a large withholder from July 2000. [New paragraph 16-125(1)(a)]
Payer is not classed as large for June 2000 but has PAYE remittances greater than $1 million (alone or as part of a company group) during the period 1 July 1999 to 30 June 2000. Payer will be classed as a large withholder from July 2000. [New paragraph 16-125(1)(b) and subparagraph 16-125(1)(d)(i)] Payer will be classed as a large withholder from July 2000. [New paragraph 16-125(1)(c) and subparagraph 16-125(1)(d)(ii)]
Payer has notional remittances greater than $1 million under labour hire arrangements (alone or as part of a company group) assuming new section 12-60 had applied during the period 1 July 1999 to 30 June 2000. Payer will be classed as a large withholder from July 2000. [New paragraph 16-125(1)(c) and subparagraph 16-125(1)(d)(ii)] Payer will be classed as a large withholder from July 2000. [New paragraph 16-125(1)(c) and subparagraph 16-125(1)(d)(ii)]
Medium Payer is classed as a medium remitter for June 2000 and has made more than $25,000 in PAYE remittances during the period 1 July 1999 to 30 June 2000. Payer will be classed as a medium withholder from 1 July 2000, unless the amounts withheld from all events exceed $1 million (in which case they are classed as large). [New paragraph 16-135(1)(a)]
Payer is classed as a medium remitter for June 2000 only because of PPS and/or RPS remittances. Payer will be classed as a small withholder from 1 July 2000, unless they are classed as large under new section 16-125 .
Payer is classed as a small remitter for June 2000 but has made PAYE remittances of between $25,000 and $1million during the period 1 July 1999 to 30 June 2000. Payer will be classed as a medium withholder from 1 July 2000. [New paragraph 16-135(1)(b)]
Small Payer is classed as a small remitter for June 2000. Payer will be classed as a small withholder from July 2000 unless it is affected by any of the rules above. [New section 16-105]

1.131 New section 16-130 provides a concession to new withholders who are classed as large at July 2000 under these transitional rules. These withholders will be given 2 months in which to organise their electronic payments. For July and August 2000 they may continue to remit as monthly payers and then remit amounts (other than those referred to in the next paragraph) as large withholders from 1 September 2000.

1.132 New section 16-120 provides a special transitional rule applying to the timing of payments for amounts withheld under the DIR, No TFN, MWT and NRP events. The rule allows withholders classed as large as at 1 July 2000 to continue to pay these amounts to the Commissioner on a monthly basis in respect of the 2000-2001 financial year rather than according to the large withholder payment rules under new sections 16-75 and 16-85 . From 1 July 2001, all large withholders will have the same remittance obligations.

Part 4 - Changes to current arrangements and terminology

1.133 Standardising the current withholding arrangements into one PAYG withholding system from 1 July 2000 will result in changes to existing elements in those arrangements. Some of these changes are discussed below.

Terminology

Entity

1.134 The term entity as defined in section 960-100 of the ITAA 1997 is consistently used in the new withholding provisions. The use of this term will change the effect of the current law as follows:

the withholding tax provisions will extend to Territory governments and their authorities. This change to the law will reflect the existing practice under which Territory governments and their authorities collect withholding tax although the provisions do not expressly cover them;
the MWT provisions will extend to the government of the Australian Capital Territory and its authorities. This change is not expected to have any practical significance as that Government and its authorities do not currently make mining payments; and
the references to a person in the existing provisions have been changed to an entity. This change potentially expands the scope of some of the existing arrangements to include bodies which are not legal persons, for example partnerships.

Definition of money

1.135 The new PAYG withholding system provisions do not contain an equivalent to the current definition of money in subsection 221YL(5) of the ITAA 1936. This term is not used directly in the new system but forms part of the definition of non-cash benefit being inserted into subsection 995-1(1) of the ITAA 1997 for the purposes of the withholding provisions. It is considered that the ordinary meaning of the term money includes the kinds of financial instruments denominated in money which are currently included in the subsection 221YL(5) definition of that term.

Withholding from dividends, interest and royalties

1.136 Two changes are being made to the existing law about DIR withholding tax.

Interest derived through an overseas permanent establishment - period of grace

1.137 The rewritten interest withholding tax provisions will modify the operation of subsection 221YL(2F) of the ITAA 1936. Currently under that provision, a borrower who has received a notification under subsection 221YL(2E) must withhold from interest paid one month after receipt of the notice. The effect of subsection 221YL(2F) is that if interest is paid within one month of the receipt of a notice under subsection 221YL(2E), the borrower is under no obligation to withhold from the payment.

1.138 New section 12-255 , which replaces subsection 221YL(2F), removes the one month period of grace currently applying under that provision. It requires the borrower to withhold from any payment of interest made following the receipt of a notice under new section 12-260 or subsection 221YL(2E) of the ITAA 1936 informing the borrower that the payment is subject to withholding tax. This change removes the opportunity for the collection of withholding tax to be avoided by timing relevant payments of interest to fall within the current one month period of grace.

Avoidance of withholding tax - GIC on unpaid penalty where Part IVA applies

1.139 Currently section 221YQA of the ITAA 1936 requires the payer to pay an amount equal to the penalty imposed on the non-resident payee where the Commissioner has made a determination under Part IVA (Anti-avoidance provisions) that an amount is subject to withholding tax. New subsection 16-200(2) clarifies that the amount is payable when the payee becomes liable to pay the penalty. New subsection 16-200(4) corrects an anomaly in the current law by imposing the GIC if the amount is not paid by that time. When the GIC is paid the payee will be entitled to a credit for that amount under new subsection 18-40(1) .

Non-electronic payment penalty large withholders

1.140 The current penalty for when a large withholder fails to make payments electronically is the greater of $500 and the GIC for 7 days on the amount. New section 16-90 will vary this regime to one where a penalty of 5 penalty units (currently $550) will become payable at least 14 days after the Commissioner notifies the large withholder. GIC will then accrue on any unpaid penalty amount.

PAYE system - payments not specifically carried forward

1.141 New withholding events will be introduced to ensure withholding continues to apply to the majority of individuals currently within the PAYE system. These new arrangements are contained in new Subdivisions 12-B to 12-D of new Schedule 1 to the TAA 1953. The new PAYG withholding system will not specifically refer to the following payments mentioned in the PAYE provisions:

payments by way of commission to an insurance or time payment canvasser or collector (currently set out in paragraph (d) of the definition of salary or wages in subsection 221A(1) of the ITAA 1936). This category of payments does not reflect modern commercial practice in relevant industries and has become obsolete;
payments by way of allowance under the Re-establishment and Employment Act 1945 or payments of a like nature (currently set out in paragraph (e) of the definition of salary or wages in subsection 221A(1) of the ITAA 1936). These payments are no longer made; and
payments subject to paragraph (a) of the definition of salary or wages in subsection 221A(1) of the ITAA 1936. These payments were discussed above in the Background to the legislation .

Natural Resource Payments

1.142 The payment rules in new section 16-75 will defer the due date for payment of amounts withheld under the NRP arrangements from the 14th day of the relevant month to the 21st day of that month. This change aligns the due date for these payments with the due date for amounts withheld under other events.

Part 5 - Crediting rules, Reviewable decisions, Payment summaries, Offences

1.143 This Part explains the amendments in the new PAYG withholding system covering the above matters.

Crediting rules

1.144 New Subdivision 18-A deals with when a person will be entitled to a credit for an amount withheld under the PAYG withholding arrangements and how to calculate the amount of that credit.

1.145 The crediting rules currently applying under the DIR and MWT arrangements have been maintained as separate rules applying only to those arrangements. They are set out in new sections 18-30 and 18-45 respectively.

1.146 Standardised crediting rules applying to all other withholding arrangements are set out in new sections 18-15 to 18-25 . These standardised rules are the same as those currently applying under the PAYE, PPS, RPS, no TFN and NRP withholding arrangements.

1.147 The finding table in Section 4 will assist in locating the generic equivalent in the new law to the crediting provisions applying under the existing withholding arrangements.

Reviewable decisions

1.148 New section 20-80 sets out the decisions against which a person may object in the manner set out in Part IVC of the TAA 1953. It also ensures that current reviewable decisions under the different withholding systems will extend to the new withholding arrangements commencing on 1 July 2000. Item 65 of the table in new section 20-80 introduces a new objection right against a decision of the Commissioner not to refund an amount under new subsection 18-70(2) . Items 1, 5 and 10 in the table in new section 20-80 also introduce objection rights against a decision of the Commissioner not to give an exemption certificate under new section 12-335 or to revoke or vary a condition of the certificate.

Offences

1.149 New section 20-35 contains a generic equivalent to the offence provisions currently applying to the PAYE arrangements under section221V of the ITAA 1936.

1.150 These offences relate to:

fraudulent or other improper use of a document issued by the Commissioner for the purposes of obtaining a credit for, or payment of, an amount withheld under the PAYG withholding arrangements, including improper use of a payment summary; and
endeavouring to obtain the benefit of an amount withheld from a payment made to another person.

1.151 The penalty for these offences is 60 penalty units and/or imprisonment for 12 months.

Payment Summaries

1.152 The current withholding systems require a range of summary documents to be issued by payers to payees detailing withheld amounts during a period. Payment summaries currently include PAYE group certificates, PPS payment summaries and statements about deductions under the DIR withholding and MWT systems. The PAYG withholding system will replace these summaries with one payment summary. [New sections 16-155 and 16-170]

1.153 The new payment summary provisions generally reflect those for the PAYE system. A payer will be required to issue 2 copies of the payment summary for a summary period. A departure from the current law is that payees are permitted to apply for a part-year payment summary at any time. This rule is not linked to the cessation of employment. [New subsection 16-155(2) and section 16-170]

Reportable fringe benefits and ETPs

1.154 The recently enacted rules for the reporting of reportable fringe benefit amounts will be included in the payment summary provisions. As a result, part-year payment summaries covering reportable fringe benefits amounts may not be issued; nor may part year payment summaries be issued covering withholding payments if there is a reportable fringe benefit amount in respect of the recipient for the year of income. The exception is required because there are reportable amounts which can only be calculated at the end of the FBT year (31 March). This is achieved by providing for part-year payment summaries only for withholding payments. [New section 16-160]

1.155 The current law provides a special rule where an employee ceases employment between 1 April and 30 June in a particular financial year. The payer must provide a separate payment summary for this particular amount. The new payment summary provisions also provide for this outcome. The reportable fringe benefits amount for the period from 1 April to when the employee ceased employment will be included on a payment summary issued by 14 July after the end of the following financial year. The withholding payments for this period are already included on the payment summary issued by 14 July after the end of the current financial year together with any reportable fringe benefits amount calculated to 31 March of the current financial year. This is illustrated in the following example:

Example If David ceased employment on 12 April 2001 and there was a reportable fringe benefit amount in respect of his employment, then David's employer George would be required to issue 2 copies of a separate payment summary for the reportable fringe benefit amount paid from 1 April 2001 to 12 April 2001 no later than 14 July 2002.Amounts withheld from payments made to David up to 12 April 2001 and the reportable fringe benefits amounts calculated to 31 March 2001 must be included on a payment summary provided by George to David by 14 July 2001.

1.156 Where an ETP is made, a separate payment summary must be provided to the payee within 14 days after the ETP has been made. This rule reflects the existing law for group certificates. [New section 16-165]

1.157 The new system adopts the same penalty of 20 penalty units for non-compliance as that in the group certificate rules in Division 2 of Part of the ITAA 1936. [New section 16-175]

Section 3 - Consequential amendments and Application provisions

Consequential amendments

1.158 Part 2 in Schedule 1 to this Bill contains consequential amendments to the Acts listed below.

1.159 The amendments are necessary to update terminology, in particular the definitions of PAYE earner and employee used in those Acts, and ensure that those Acts interact as intended with the new PAYG withholding system. Unless otherwise shown, references to item numbers in this explanation are references to numbers in Part 2 of Schedule 1 to this Bill. Further, references to new sections are references to sections in the new PAYG withholding system in the TAA 1953.

Income Tax Assessment Act 1997

Deduction for interest and royalty amounts

1.160 Section 221YRA of the ITAA 1936 provides that no deduction is allowed for an amount of interest or royalty, unless the withholding obligations associated with payment of that amount have been fulfilled. This rule also applies to interest and royalty amounts under the new withholding system. New section 26-25 of the ITAA 1997 achieves this outcome. [Item 5]

Car expenses and substantiation

1.161 Division 28 of the ITAA 1997 provides rules for working out deductions for car expenses and refer to a PAYE earner and PAYE earnings as defined in section 995-1 of the ITAA 1997. The definitions in turn rely on the definitions of employee and salary or wages as defined in section 221A of the ITAA 1936.

1.162 Division 900 of the ITAA 1997 contains provisions for substantiating deductions. Section 900-12 of the ITAA 1997 utilises the expressions PAYE earner and PAYE earnings. The meanings of these terms define the scope of the provisions.

1.163 Amendments are required as the concepts currently used will not support the introduction of the new PAYG withholding system from 1 July 2000. The amendments will ensure that the substantiation and car expense rules in the ITAA 1997 apply to payments which are covered by new sections 12-35, 12-40, 12-45 and 12-50 (payments for work or services), new Subdivision 12-C (retirement payments, eligible termination payments and annuities) and new Subdivision 12-D (benefit and compensation payments) of Part 2-5 of the TAA 1953. These are the same types of payments in Part VI of the ITAA 1936 that these ITAA 1997 rules cover. [Items 6 and 8]

Guide material about collection rules

1.164 Item 7 repeals Parts 4-5 and 4-10 of the ITAA 1997 as these Parts are no longer required with the introduction of the new PAYG instalment and withholding provisions into the TAA 1953. The Parts contain Guide material about the collection of income tax instalments (Part 4-5) and the collection of withholding taxes (Part 4-10).

Income Tax Assessment Act 1936

Closing down current withholding and reporting systems

1.165 The following paragraphs refer to the consequential amendments which are necessary to close down the various withholding systems from 1 July 2000.

Reportable payments system

1.166 Items 11 and 12 will amend the current RPS provisions in the ITAA 1936 to ensure that the RPS will not apply to reportable payments made after 30 June 2000 and that annual reports under the RPS will not be required for financial years ending after 30 June 2000.

1.167 Items 13 and 14 amend the payer obligations where TFN or pensioner exemption forms are provided. These rules will only apply where reportable payments were made (paragraph 220AQ(1)(b)) and (paragraph 220AQ(2)(c)) on or before 30 June 2000.

Pay as you earn system

1.168 Item 22 ceases the operation of the current PAYE system. The item amends subsection 221C(1A) of the ITAA 1936, which is the obligation to deduct, to apply only where payments of salary or wages are made to an employee before 1 July 2000.

1.169 Tax vouchers are not an element of the new withholding system. Item 23 amends section 221K of the ITAA 1936 to provide that tax vouchers may only be purchased before 1 July 2000.

1.170 Item 24 amends section 221S of the ITAA 1936 to limit the operation of the provisions for arrangements with authorities of other countries for deductions to be made from salary or wages by providing that authorisations apply before 1 July 2000. Item 25 supplements this by inserting new subsection 221S(2A) which provides that arrangements or authorisations made do not apply to payments of salary or wages made after 30 June 2000.

Prescribed payments system

1.171 Item 30 inserts new section 221YHAAA into the ITAA 1936 which provides that the PPS system does not apply to a prescribed payment made after 30 June 2000.

1.172 Item 31 amends section 221YHDD of the ITAA 1936 to ensure the householder reporting rules for construction projects will only apply where the contract is entered into before 1 July 2000. Item 32 provides a transitional rule for projects that commence before and are not completed by 30 June 2000. Householders must report payments made to 30 June 2000 for these projects, but not payments made after this date. Items 33 and 34 apply the current record keeping and offence provisions to the new transitional rule.

Withholding from natural resource payments and TFN withholding

1.173 Item 35 ceases the operation of the current rules for withholding from NRP, by limiting the obligation to provide a statement to the Commissioner about natural resource payments made to a non-resident, to payments before 1 July 2000.

1.174 Item 36 ceases the operation of the rules for withholding where no TFN has been provided in relation to investment income. This is achieved by inserting new subsection 221YHZC(1AAAA) into the ITAA 1936 which provides that the deduction rule does not apply to payments made after 30 June 2000.

1.175 Items 37 and 38 limit the rule that an investment body shall not pay non-money unattributed income until an amount has been paid to the Commissioner, to phasing-in periods ending before 1 July 2000.

1.176 Item 39 inserts into subsection 221YHZQ(1), the rule for undeducted TFN amounts in relation to an eligible deferred interest investment, references to the new withholding provisions. Subsection 221YHZQ(1) remains operative in the ITAA 1936 for the new withholding system.

Withholding tax dividends, interest and royalties

1.177 The current system for withholding from payments of dividends, interest and royalties to non-residents will cease to apply to payments after 30 June 2000. Item 40 achieves this by inserting new subsection 221YL(1A) into the ITAA 1936 which provides that the deduction provisions of the current DIR system do not apply to payments of these amounts after 30 June 2000.

1.178 Item 41 inserts new subsection 221YL(2DA) into the ITAA 1936 to limit the obligation in current subsection 221YL(2E), for payers who are lenders to notify borrowers that subsection 221YL(2E) applies, to transactions before 1 July 2000. This notification rule is included in new section 12-260 and applies where the transaction is on or after 1 July 2000.

1.179 Items 42 to 44 limit the operation of the rules which prohibit non-cash dividend payments unless an amount has been paid to the Commissioner, to payments made before 1 July 2000. Similar rules for non-cash dividend payments on or after 1 July 2000 are provided by new Division 14 of Schedule 1 to the TAA 1953.

Mining withholding tax

1.180 Item 45 ceases the operation of the mining withholding provisions of the ITAA 1936. Subsection 221ZB(1) of the ITAA 1936 will be amended to provide that the obligation to deduct from mining payments will apply to payments made before 1 July 2000. Payments on or after this date are covered by the new withholding system.

Australian Film Industry Trust Accounts

1.181 Item 46 formally ceases the application of the provisions underlying this withholding system. In practice, there have been no such accounts for several years. The item inserts new section 221ZMA into the ITAA 1936 which provides that the rules do not apply to a withdrawal from a film account made after 30 June 2000.

Farm management deposits

1.182 Item 47 ceases the operation of the FMD withholding provisions by amending subsection 221ZXB(1) of the ITAA 1936 to provide that the obligation to deduct under the current system applies only where the repayment occurs before 1 July 2000. Repayments made on or after this date are covered by the instalment part of the new PAYG system.

Record keeping

1.183 Items 48 and 49 make consequential amendments to the record keeping provisions in section 262A of the ITAA 1936. Item 48 inserts new subsection 262A(2A) into the ITAA 1936so that entities required to withhold amounts under the new PAYG withholding system will need to keep the appropriate records for the statutory 5 year period in subsection 262A(4). Item 49 introduces new subsection 262A(4AAA) which will exclude the operation of subsection 262A(4) in relation to records which are required to be kept by a provision in Schedule 1 to the TAA 1953. For example, the new withholding event voluntary agreement to withhold in new section 12-55 has its own record keeping requirements in relation to the voluntary agreement in new subsection12-55(2).

A New Tax System (Goods and Services Tax) Act 1999

1.184 The GSTA 1999 will generally apply to transactions involving enterprises. The concept of enterprise as defined in section 9-20 of the GSTA 1999 refers to an activity or series of activities other than as an employee or other PAYE earner.

Terminology (enterprise, PAYE earner, voluntary agreements)

1.185 Items 50 to 52 make the necessary amendments to the GSTA1999 so that, in addition to withholding payments to employees, the concept of enterprise for GST purposes will now refer to withholding payments to company directors [new section 12-40], office holders [new section 12-45] and under labour hire arrangements [new section 12-60] in the new PAYG withholding system rather than the term other PAYE earner.

1.186 Items 55 to 63 will amend Division 111 (Reimbursement of employees etc.) in the GSTA 1999 which deals with entitlements to input tax credits for reimbursing employees and others. The amendments will remove the current references to PAYE earner and result in the Division applying where withholding payments are made to employees, company directors, office holders, under labour hire arrangements and under voluntary agreements. This outcome is achieved by applying the Division and treating those payees as if they were employees and their activities in earning the withholding payments were activities as employees.

Voluntary agreements new section 12-55 interaction with GSTA-1999

1.187 Items 53, 54, 64 and 67 make the necessary amendments to support the introduction of new Division 113 PAYG voluntary agreements into the GSTA 1999. The amendments will generally result in the provision of work or services under new section 12-55 not being a taxable supply for GST purposes. However, where the payer is input taxed, the work or services will be a taxable supply even if the transaction is covered by new section 12-55 . This outcome will prevent the avoidance of GST in input taxed industries through the use of voluntary agreements.

A New Tax System (Australian Business Number) Act 1999

1.188 The consequential amendments to the ABNA 1999 are similar in nature to the amendments to the GSTA 1999 as both laws use the same definition of enterprise. Enterprise is defined in section 38 of the ABNA 1999.

1.189 Items 72 to 74 and 76 make the necessary changes to replace the current reference to PAYE earner. Items 75, 77 and 78 introduce new definitions into the ABNA 1999 covering the terms non-cash benefit and withholding payment.

Fringe Benefits Tax Assessment Act 1986

1.190 The FBT law refers to, and relies for its operation on, a number of interrelated concepts in Part VI of the ITAA 1936, namely employee, employer and salary or wages. The relationship between the application of the FBT law and the withholding collection system is defined primarily through the operation of the definition of salary or wages. Section 137 of the FBTAA 1986 extends the concept of salary or wages to include employer-employee relationships where remuneration is provided only as fringe benefits and/or by another party. [Items 82 and 83]

1.191 FBT will only apply to circumstances to which the withholding events that correspond to the old PAYE provisions apply and where payments of fringe benefits may arise. Therefore the FBT law will apply to circumstances covered by new sections 12-35, 12-40, 12-45, 12-115 and 12-120 in the new PAYG withholding system. [Item 81]

1.192 These consequential amendments apply to benefits provided on or after 1 July 2000. [Item 84]

Taxation Administration Act 1953

1.193 Subsection 8AAB(5) of the TAA 1953 provides an index of provisions of Acts other than the ITAA 1936 that deal with liability to the GIC. Item 85 amends this index to include references to those provisions of the new PAYG system which address liability to the GIC.

1.194 Items 86 to 88 amend section 8AAJ of the TAA 1953 which lists those provisions which give rise to the failure to notify penalty. Item 86 amends subsection 8AAJ(1) to reflect the insertion of new subsection 8AAJ(5) . Item 87 removes from subsection 8AAJ(4) references to sales tax provisions which are now listed in the new table in subsection 8AAJ(5). Item 88 inserts new subsection 8AAJ(5) which includes a table listing those provisions of Acts other than the ITAA 1936, including those of the new PAYG system, that deal with liability to the failure to notify penalty.

Consequential amendments to other Commonwealth legislation

1.195 The consequential amendments explained above are necessary to ensure the new PAYG withholding system will interact with other laws and apply as intended from 1 July 2000. Further consequential amendments are required to update references to provisions in taxation and other Commonwealth legislation which will not be relevant after 1 July 2000. These consequential amendments will be introduced in a later Bill.

Application provisions

1.196The new PAYG withholding system will apply from 1 July 2000. Item 3 of Part 1 of Schedule 1 to this Bill provides application provisions for particular elements of the new PAYG withholding system.

1.197 New Division 12 in Schedule 1 to the TAA 1953 contains the provisions of the new withholding system which specify the payments from which amounts must be withheld. Subitem 3(1) provides that new Division 12 applies to a payment made on or after 1 July 2000.

1.198 New sections 12-215, 12-250 and 12-285 address dividends, interest and royalties received in Australia for foreign residents. The provisions derive their application from the receipt of the payment by the payee, rather than the making of the payment by the payer. Subitem 3(2) provides that the rules apply to an amount received on or after 1 July 2000.

1.199 New section 12-255 covers situations involving withholding from interest derived by a lender in carrying on business through an overseas permanent establishment and new section 12-260 requires notification by a lender to a borrower that interest has been derived through an overseas permanent establishment.

1.200 New section 12-255 will apply to payments on or after 1 July 2000, regardless of when the relevant notification was given. The rule will apply where there has been a notification under new section 12260 or under section 221YL(2E) of the ITAA 1936.

1.201 Subitem 3(3) provides that the notification provision in new section 12-260 will apply if an amount is payable on or after 1 July 2000. Therefore subsection 221YL(2E) is limited to amounts payable before 1 July 2000.

1.202 New Division 14 of Schedule 1 to the TAA 1953 applies to the provision of a non-cash benefit, rather than the making of a payment. Subitem 3(4) provides a specific application rule for the Division, so that it applies to non-cash benefits provided on or after 1 July 2000.

1.203 New Subdivision 16-C imposes obligations to provide information to the Commissioner and to the recipient of a payment. These obligations relate to financial years. Subitem 3(5) states that these rules apply to financial years starting on 1 July 2000 and to later financial years.

SECTION 4 - Finding Tables

1.204 The finding tables below relate the provisions in the current withholding arrangements which will form part of the PAYG withholding system to the new standardised provisions contained in the PAYG law. The tables have been provided as a guide and are intended to show where the concepts in the current arrangement are now located in the new PAYG law.

1.205 The existing withholding provisions fall into five broad categories:

provisions which have been replaced with a generic equivalent as set out in the table;
provisions which will continue to operate but which have not been translated across into the new PAYG withholding law. An example of this category is section 221YMA of the ITAA 1936. This category of provisions is denoted in the table by the term no change;
provisions which have become redundant because of the way in which the new law will operate. For example, the definition of books closing time contained in subsection 221YHZA(5) of the ITAA 1936 has been built into new section 12-140 , thereby removing the need for a separate explanation of that term. This category of provisions is denoted in the table by the term Redundant;
provisions for which no equivalent is included in this Bill but for which generic equivalents will be included in a later Bill. These provisions are denoted by the terms Registration, Reporting and Recovery indicating what type of element they will form in the later Bill.
provisions for which there is no equivalent in the PAYG law but which may be dealt with elsewhere in the tax law. These are denoted by the term no equivalent.

Part VI of the Income Tax Assessment Act 1936
Old New Old New
Division 2 - PAYE
221A(1) - definitions of salary or wages, eligible local governing body and eligible person Refer new Subdivisions 12-B, 12-C & 12-D 221F(5E) No equivalent
221A(2) No equivalent 221F(5F) No equivalent
221B No change 221F(5G) No equivalent
221C(1) 16-10(1) 221F(5GA)) 16-155(1)(c)
221C(1AB) 16-10(2) 221F(5GB) 16-170
221C(1AC) 16-10(2) 221F(5GC) No equivalent
221C(1AD) 16-10(2) 221F(5GD) No equivalent
221C(1AE) 16-10(2) 221F(5H) 16-165
221C(1A) 16-10(1) & 16-25(1) 221F(5I)) 16-170
221C(1B) 16-25(4) 221F(5J) Reporting
221C(2) No equivalent 221F(6) Redundant
221C(2A) No equivalent 221F(7) 16-170(4)
221C(2B) No equivalent 221F(13) No equivalent
221C(2C) No equivalent 221F(15) 16-175
221C(3) No equivalent 221F(16) Redundant
221D(1) 16-15(1) 221F(17) Redundant
221D(2) 16-15(3) 221H(1) 18-100
221D(3) - (7) No equivalent 221H(1A) No equivalent
221DA No equivalent 221H(1B) No equivalent
221E No equivalent 221H(1C) No equivalent
221EAA(1) 16-30(1) 221H(2) 18-15
221EAA(2) 16-30(2) 221H(3) No equivalent
221EAA(3) 16-50 221H(4B) No equivalent
221EAA(4) 16-35, 16-40 & 16-50 221H(5) No equivalent
221F(1) Registration 221H(5A) 18-75
221F(2) Registration 221K No equivalent
221F(2A) Registration 221N(1) 16-45(1)
221F(3) Registration 221N(2) 16-45(2)
221F(4) Registration 221N(4) 20-80, item 15
221F(5A) 16-155(1) 221R Recovery
221F(5B) 16-155(2) & 16-170 221S No equivalent
221F(5C) 16-160(1) 221V 20-35
221F(5CA) 16-160(1) 221W 20-40
221F(5CAA) 16-160(2) 221X No equivalent
221F(5CB) 16-155(1) 221YAA 20-60
221F(5D) 16-170
Old New Old New
Division 3B NRP and TFN withholding
Subdivision A 221YHZD(1B) 14-5
221YHZA(1) Redundant 221YHZD(1C) 14-15
221YHZA(2) 11-5 221YHZD(2) 16-80
221YHZA(2A) 12-145 221YHZD(3) No change
221YHZA(2B) 12-150 221YHZD(4) No change
221YHZA(3) 12-325(1) 221YHZD(5) No change
221YHZA(4) 12-140(2) 221YHZDA(1) 18-65(1)
221YHZA(5) Redundant 221YHZDA(1A) 18-65(3)
221YHZDA (1B) 18-65(4)
Subdivision B 221YHZDA(2) 18-5
221YHZB(1) 12-330(1) 221YHZDA(3) 18-65(2)
221YHZB(2) 12-330(1) 221YHZDAA (1) 18-70(1)
221YHZB(3) Redundant 221YHZDAA (2) 18-70(2)
221YHZB(4) 12-335(1) 221YHZDAA (3) 18-5
221YHZB(5) 12-335(2) 221YHZDAB No change
221YHZB(6) 12-335(3) 221YHZDAC No change
221YHZB(7) 12-335(3) 221YHZDB 18-80
221YHZB(8) 12-330(2) 221YHZE(2) 16-45(1)
221YHZC(1) 12-325, 16-15 & 16-25 221YHZE(3) 16-45(2)
221YHZC(1A) 12-140(1), 12-145, 12-160, 12-170, 16-5, 16-155, 16-25 & 16-10 221YHZH 16-20
221YHZC (1AA) Redundant 221YHZJ Recovery
221YHZC (1AAA) Redundant 221YHZK(1) 18-15
221YHZC (1B) 12-165 221YHZK(2) 18-20
221YHZC(1C) 16-10 221YHZK(3) 18-25
221YHZC(1D) To be included in the Regulations 221YHZK(4) Redundant
221YHZC(1E) 12-10 221YHZL(1) No equivalent
221YHZC(2) 16-25(4) 221YHZL(6) No equivalent
221YHZC(3) 16-30(1) 221YHZL(7) No equivalent
221YHZC(4) 16-30(2) 221YHZM 20-80, Item 15
221YHZC(5) 16-50 221YHZN(1) 20-5(1)
221YHZC(6) 16-35 221YHZN(2) 20-5(2)
221YHZCA(1) 16-150(1) 221YHZN(3) 20-5(3)
221YHZCA(2) 16-150(2) 221YHZN(4) 20-5(4)
221YHZCA(3) 16-150(1) 221YHZN(5) 20-5(4)
221YHZD(1) 16-70 221YHZN(6) No equivalent
221YHZD(1A) 16-70 221YHZO 20-60
221YHZD(1AA) No equivalent
221YHZD (1AB) 18-65(6)
221YHZD (1AC) 18-65(7) Subdivision C No change.
Old New Old New
Division 4 DIR withholding
221YJ 11-1 221YN(3) Redundant
221YK (1) Redundant 221YN(4) 16-80
221YK (2) 12-225 221YP(1) 14-5 & 14-10
221YK (3) 11-5 221YP(2) 14-5 & 14-10
221YK (4) No equivalent 221YP(3) No equivalent
221YK (5) 20-15 221YP(3A) 14-5 & 14-10
221YL(1) 12-210 221YP(4) 16-25(2)
221YL (2) 12-215 221YQ(1) 16-30 & 16-40
221YL (2A) 12-245 221YQ(1A) 16-30 & 16-40
221YL (2B) 12-250 221YQ(2) 16-195
221YL (2C) 12-260 221YQ(3) 18-35(1)
221YL (2D) 12-260 221YQ(4) 18-35(2) & (3)
221YL (2E) 12-260 221YQA(1) 16-200(1)
221YL (2F) 12-255 221YQA(2) 16-200(3)
221YL (2G) 12-280 221YQA(3) 18-40(1)
221YL (2H) 12-285 221YQA(4) 18-40(2)
221YL (3) 12-300 221YR Recovery
221YL (3A) 12-300 221YRA(1) 26-25
221YL (4) 12-10 221YRA(1A) 26-25
221YL (4AA) 12-5(2) 221YRA(2) 26-25
221YL (4A) 16-25 221YRA(3) No equivalent
221YL (4B) 16-25(4) 221YS(1) 18-30
221YL (5) No equivalent 221YS(2) 18-30
221YM 16-15 221YSA No change
221YMA No change 221YT(1) No equivalent
221YN(1) 16-70 221YT(3) No equivalent
221YN(2) 16-150(1) 221YT(4) No equivalent
221YN(2A) 16-150(2) 221YU No change
221YN(2B) 16-150(1) 221YV 16-20
221YN(2C) Redundant 221YY 20-40
Old New Old New
Division 5 MWT
221Z 11-1 221ZD(1) 16-30(1)
221ZA (1) Redundant 221ZD(1A) 16-30(2)
221ZA (2) Redundant 221ZD(1B) 16-50
221ZB(1) 12-320 221ZD(2) 16-195
221ZB(2) 16-25(1) & (2) 221ZD(3) 18-45(2)
221ZB(3) 16-25(4) 221ZE Recovery
221ZC(1) 16-70 221ZF 18-45(1)
221ZC(2) 16-150(1) 221ZG(1) No equivalent
221ZC(2A) 16-150(2) 221ZG(3) No equivalent
221ZC(2B) 16-150(1) 221ZG(4) No equivalent
221ZC(2C) Redundant 221ZH 16-20
221ZC(3) Redundant 221ZL 20-40
221ZC(4) 16-80


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