Edited version of private advice

Authorisation Number: 1051766339334

Date of advice: 12 October 2020

Ruling

Subject: Pay as you go withholding tax

Question 1

Is the taxpayer required under section 16-140 of the TAA 1953 to apply for registration?

Answer

Yes.

Question 2

If the answer to question 1 is 'yes' and the taxpayer is registered, will the Commissioner exercise his discretion to cancel the registration under section 16-141 of the TAA 1953?

Answer

No.

Question 3

Will the taxpayer be required to provide notification to the Commissioner under section 16-150 of Schedule 1 to the TAA 1953?

Answer

Yes.

Question 4

Will the Commissioner exercise his discretion under subsection 16-153(6) of Schedule 1 to the TAA 1953 to release the taxpayer from the requirement to include the payments in its annual report under section 16-153 of Schedule 1 to the TAA 1953?

Answer

No.

Question 5

Will the Commissioner exercise his discretion under section 16-180 of Schedule 1 to the TAA 1953 to exempt the taxpayer from its requirements under:

§  section 16-155 of Schedule 1 to the TAA 1953; and

§  section 16-160 of Schedule 1 to the TAA 1953?

Answer

No.

Question 6

Will the taxpayer be required to provide notification to the Commissioner under section 202CF of the Income Tax Assessment Act 1936 (ITAA 1936) where a payee does not provide a TFN declaration?

Answer

Yes.

This ruling applies for the following period:

The income year ended 30 June 2020 and;

The income year ended 30 June 2021

Relevant facts and circumstances

The taxpayer is a company limited by guarantee.

Relevant legislative provisions

Section 16-70 of Schedule 1 Taxation Administration Act 1953

Section 16-140 of Schedule 1 Taxation Administration Act 1953

Section 16-141 of Schedule 1 Taxation Administration Act 1953

Subsection 16-150 of Schedule 1 Taxation Administration Act 1953

Subsection 16-153 of Schedule 1 Taxation Administration Act 1953

Subsection 16-155 of Schedule 1 Taxation Administration Act 1953

Subsection 16-160 of Schedule 1 Taxation Administration Act 1953

Section 16-180 of Schedule 1 Taxation Administration Act 1953

Section 202CF Income Tax Assessment Act 1936

Reasons for decision

Question 1

Summary

The taxpayer is required under section 16-140 of the TAA 1953 to apply for registration.

Detailed reasoning

Under section 16-140, taxpayers must apply to register with the Commissioner if they make a withholding payment. Specifically, paragraph(a) of subsection 16-140(1) states:

"An entity that must pay an amount to the Commissioner under subsection 16-70(1) must apply to register with the Commissioner"

Under the circumstances of this case, section 16-70(1) would require the taxpayer to pay an amount of withholding to the Commissioner.

Therefore, the taxpayer is required to apply for registration under section 16-140.

Question 2

Summary

The Commissioner will not exercise his discretion to cancel the registration under section 16-141 of the TAA 1953.

Detailed reasoning

The Commissioner will not exercise his discretion to cancel the registration under section 16-141 of the TAA 1953.

Question 3

Summary

The taxpayer will be required to provide notification to the Commissioner under section 16-150 of Schedule 1 to the TAA 1953.

Detailed reasoning

Section 16-150 states:

"an entity that must pay an amount (even if it is a nil amount) to the Commissioner under: (a) subsection 16-70 (about amounts withheld under Division 12);

or (aa) Division 13 .......

must notify the Commissioner of the amount on or before the day on which the amount is due to be paid (regardless of whether it is paid). The notification must be in the *approved form and lodged with the Commissioner."

The taxpayer is required under section 16-70 to pay the Commissioner a withholding amount. Accordingly, under section 16-150, the taxpayer must notify the Commissioner of the amount on or before the day on which the amount is due to be paid.

Question 4

Summary

The Commissioner will not exercise his discretion under subsection 16-153(6) of Schedule 1 to the TAA 1953 to release the taxpayer from the requirement to include the payments in its annual report under section 16-153 of Schedule 1 to the TAA 1953.

Detailed reasoning

The Commissioner will not exercise his discretion under subsection 16-153(6) of Schedule 1 to the TAA 1953to release the taxpayer from the requirement to include the payments in its annual report under section 16-53 of Schedule 1 to the TAA 1953.

Question 5

Summary

The Commissioner will not exercise his discretion under section 16-180 of Schedule 1 to the TAA 1953 to exempt the taxpayer from its requirements under:

-       section 16-155 of Schedule 1 to the TAA 1953; and

-       section 16-160 of Schedule 1 to the TAA 1953.

Detailed reasoning

The Commissioner will not exercise his discretion to exempt the taxpayer from its requirements under:

-       section 16-155 of Schedule 1 to the TAA 1953; and

-       section 16-160 of Schedule 1 to the TAA 1953?

Question 6

Summary

The taxpayer will be required to provide notification to the Commissioner under section 202CF of the Income Tax Assessment Act 1936 (ITAA 1936) where a payee does not provide a TFN declaration.

Detailed reasoning

Section 202CF of the ITAA 1936 is about the obligation to notify the Commissioner where the payee does not make a TFN declaration.

Subsection 202CF (1) of the ITAA 1936 provides:

"If, after the commencement of this section, a person (the payer ) commences a relationship with another person under which, or as a result of which, the payer will make (or will be likely to make) eligible PAYG payments to a person (the recipient ), whether or not the recipient is a party to the relationship, the payer must give notice to the Commissioner in the approved form, within 14 days after the commencement of the relationship, unless a TFN declaration made by the recipient to the payer is in effect at the end of that 14 day period."

The relationship of payer and payee as referred to in subsection 202CF (1) of ITAA 1936 exists between the taxpayer and the payees.

Therefore, the taxpayer is required under subsection 202CF(1) of the ITAA 1936 to give notice to the Commissioner in the approved form, within 14 days after the commencement of the relationship, unless the TFN declaration has already been made by the payee.

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