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Edited version of your written advice
Authorisation Number: 1012911019928
Date of advice: 27 November 2015
Ruling
Subject: Pay As You Go (PAYG) withholding obligations
Question 1
Is there an obligation to withhold from payments made under section 12-35 of Schedule 1 of the Taxation Administration Act 1953 (TAA).
Answer
No
This ruling applies for the following periods:
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
Year ending 30 June 2019
The scheme commences on:
1 July 2014
Relevant facts and circumstances
Organisation A is the umbrella organisation for a number of affiliated Associations.
Their aim is to provide a competitive environment where officials can reach their potential by providing the best possible developmental pathways for participants in their area.
Organisation A engages officials to assist in the development of ongoing operations.
Generally, the officials are relatives of current members, are former members or other persons with a connection to Organisation A. These individuals have specific skill sets and are engaged in the associate affiliation.
All officials are provided with a policy and guidelines applicable to their relevant position and all intend to complete the Australian Taxation Office approved, 'Statement by Supplier' to indicate the position as a pastime or hobby.
In addition to cash remuneration, the individuals mentioned receive a travel allowance for all metro-based travel. A uniform is also provided by Organisation A.
Officials are required to incur expenditure on, various equipment.
The payments are not intended to, nor do they usually cover expenses. The purposes of the payment is to encourage members of the community to participate by subsidising the costs associated with participation and encourage participation in specific roles that are considered a hobby.
Relevant legislative provisions
Taxation Administration Act 1953 Section 12-35 of Schedule 1.
Reasons for decision
Subdivision 12-B of Sch 1 to the TAA discusses payments for work and services.
Specifically, section 12-35 of Sch 1 outlines payments to employees. It states an entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee (whether of that or another entity).
Paragraph 14 of Taxation Ruling TR 2005/16 states for the provision to apply, there must be an employee, a payment of salary, wages etc. to an employee as a consequence of his/her employment and finally, the payment must be made by the entity.
In this case each individual receives a cash payment as outlined in the Relevant Facts and Circumstances.
The Commissioner accepts that the payees are not employees as the activities are a social or personal pursuit of a non-commercial nature and constitute a pastime or hobby, with the payments received being from the pursuit of that pastime or hobby and not for being an employee. Consequently, there is no requirement to withhold from those payments under PAYG