ATO Interpretative Decision

ATO ID 2001/202 (Withdrawn)

Income Tax

Withholding: Exempt Income
FOI status: may be released

This ATO ID is withdrawn as it is a simple statement of law and is not an interpretative decision, and to reflect changes in the law as a result of amendment to section 23AG of the Income Tax Assessment Act 1936

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Are amounts required to be withheld under the Pay As You Go (PAYG) system from a taxpayer's income which is exempt from tax under section 23AG of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

No, PAYG amounts are not required to be withheld from the exempt income.

Facts

The taxpayer will serve as a civilian police officer in East Timor for a continuous period of 180 days after 1 July 2000.

During this period the taxpayer will be paid an allowance by the United Nations together with a fortnightly salary by an Australian Police Force.

Subject to the requirements of section 23AG of the ITAA 1936 being satisfied, the income derived from this service in East Timor will be exempt from income tax in Australia.

Reasons for Decision

Section 12-35 of Schedule 1 of the Taxation Administration Act 1953 (TAA) provides that under the PAYG system an entity must withhold amounts from salary, wages, commission , bonuses or allowances it pays to an individual as an employee (whether of that or another entity).

Subsection 12-1(1) of Schedule 1 of the TAA however, provides that an entity need not withhold an amount under section 12-35 from a payment if the whole of the payment is exempt income of the recipient.

As the taxpayer's income from service in East Timor will be exempt from tax under section 23AG of the ITAA 1936 amounts are not required to be with withheld under the PAYG system from those earnings.

Date of decision: 13 June 2001

Legislative References:
Taxation Administration Act 1953
   TAA 1953 12-1(1)
   TAA 1953 Schedule 1
   TAA 1953 12-35

Income Tax Assessment Act 1936
ITAA 1936 23AG

Related Public Rulings (including Determinations)
TR 2000/14

Keywords
PAYG withholding
PAYG withholding payments to employees
Exempt income

Business Line: Small Business/Individual Taxpayers

Date of publication: 15 August 2001

ISSN: 1445-2782

history

	Date:	Version:
	13 June 2001	Original statement
You are here	15 July 2011	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).