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Ruling
Subject: Withholding variation form - NRAS tax offset
Question 1
Do you include the Federal National Rental Affordability Scheme (NRAS) refundable tax offset on a withholding variation form?
Answer
No
Question 2
Is the State direct Financial Support or In-Kind Contribution received as part of the NRAS a refundable tax offset?
Answer
No
Question 3
Do you include the State direct Financial Support or In-Kind Contribution received as part of the NRAS on a withholding variation form?
Answer
No
Question 4
Will the Federal NRAS refundable tax offset reduce the amount of PAYG withholding tax for the 2011-12 financial year?
Answer
No
Question 5
Will the State direct Financial Support or In-Kind Contribution received as part of the NRAS reduce the amount of PAYG withholding tax for the 2011-12 financial year?
Answer
No
This ruling applies for the following period
Year ended 30 June 2012
The scheme commences on
1 July 2011
Relevant facts and circumstances
You will be receiving a Federal refundable tax offset and a State direct contribution under the NRAS. You are completing a withholding variation for the 2011-2012 financial year and wish to clarify where these amounts should be included.
Relevant legislative provisions
Section 15-30 Schedule 1 Taxation Administration Act 1953
Section 15-50 Schedule 1 Taxation Administration Act 1953
Regulation 24 Taxation Administration Regulations Act 1976
Section 380-12 Income Tax Assessment Act 1997
Section 11-55 Income Tax Assessment Act 1997
Reasons for decision
Question 1
Section 15-50 of Schedule 1 to the Taxation Administration Act 1953 (TAA) allows a taxpayer who is in receipt of a withholding payment to vary the amount of PAYG withholding tax withheld from that payment. This variation request should be notified in the approved form, being a Withholding Variation Form.
Section 15-30 of Schedule 1 to the TAA states the matters which need to be considered when calculating the amount of PAYGW to withhold. These matters include the rate of income tax, the Medicare levy, HELP and SFSS repayments, and prescribed tax offsets.
Prescribed tax offsets are defined by Regulation 24 of the Taxation Administration Regulations Act 1976 (TARA). These offsets are:
§ the zone rebate
§ dependent spouse and housekeeper tax offsets
§ the ETP offset
§ superannuation offsets
§ the senior Australians tax offset; and
§ the low income tax offset.
As the NRAS offset is not included as a prescribed tax offset, it is not taken into account in calculating the amount of withholding tax to be withheld. As such, the NRAS tax offset is not included on a withholding variation form.
Question 2
The provisions of the NRAS are contained in the National Rental Affordability Scheme Act 2008. The NRAS comprises two parts. The Federal Government provides a refundable tax offset as per Division 380 of the Income Tax Assessment Act 1997 (ITAA 1997), and an additional payment or an amount in kind is provided by the State and Territory governments.
The State government contribution therefore is a direct payment, and is not considered to be a tax offset.
Question 3
Section 380-35 of the (ITAA 1997) states that payments or non-cash benefits received from a State or Territory under the NRAS are not assessable income and are not exempt income.
Subsection 6-15(3) of the ITAA 1997 states that non-assessable, non-exempt income is not assessable income.
The State payment or non-cash benefit is therefore not assessable income and does not need to be included on the withholding variation form.
Question 4
As the NRAS tax offset does not need to be included on the withholding variation form, it will not reduce the amount of PAYGW required to be withheld.
Question 5
As the State payment or non-cash benefit received under the NRAS is not assessable income, and does not need to be included on the withholding variation form, it will not reduce the amount of PAYGW required to be withheld.