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Edited version of your private ruling
Authorisation Number: 1012510529530
Ruling
Subject: PAYG withholding variation
Question
Can Pay As You Go (PAYG) deduction on phone allowance for staff be varied to nil?
Answer
No.
This ruling applies for the following period:
Year ending 30 June 2014
The scheme commences on:
1 July 2013
Relevant facts and circumstances
You pay your staff an annual allowance paid fortnightly to compensate them for business use of their mobile phones and their costs exceed this amount.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 15-2
Reasons for decision
Cash allowances such as telephone allowances paid to employees are assessable under section 15-2 of the Income Tax Assessment Act 1997.
Table 1 of the PAYG Bulletin no.1 - taxing of allowances for the 2000/01 and future income years (PAYG Bulletin) identifies allowances paid for expected deductible expenses must have PAYG withheld.
A variation of the amount formally required to be withheld under a withholding schedule may be granted if the allowance is identified in Table 2 of the PAYG Bulletin.
In your circumstances a telephone allowance is an expected deductible allowance as identified in Table 1 of the PAYG Bulletin and therefore the PAYG withholding cannot be varied to nil.