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Edited version of your written advice
Authorisation Number: 1012919106604
Date of advice: 30 November 2015
Ruling
Subject: Whether there is an obligation to withhold from payments
Question 1
Are payments made to a worker by the XX Act) assessable as salary and wages under the Income Tax Assessment Act 1997 (ITAA 1997) and if so how should these amounts be reported by the entity to the Australian Taxation Office (ATO) on an annual basis?
Answer
Decline to rule
Question 2
Is there an obligation under Section 12-90 or any other section within Part 2-5 of Schedule 1 to the Taxation Administration Act 1953 (TAA) on the entity to withhold from payments made to a worker under the Act?
Answer
No
This ruling applies for the following periods
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
The scheme commenced on
1 July 2015
Relevant facts
The entity was established under the XX Act and it administers the XX Act.
The entity's role is to administer the schemes for various Industries.
Under the XX Act a worker in the relevant industry may shift between employee and contractor status. Provision has been made for the XX Act to apply to both employees and contractors.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 83-75
Taxation Administration Act 1953 Section 12-90 of Schedule 1
Taxation Administration Act 1953 Subsection 359-5(1) of Schedule 1
Reasons for decision
Question 1
The Commissioner can only provide a private ruling in response to a valid application. Subsection 359-5(1) of Schedule 1 to the TAA states the Commissioner may, on application, make a written ruling on the way in which the Commissioner considers a relevant provision applies or would apply to you in relation to a specified scheme. The Commissioner will not be making your private ruling in respect of the first question raised in your application.
Question 2
Section 12-90 of Sch 1 to the TAA states an entity must withhold an amount from any of the following payments it makes to an individual:
(a) An unused annual leave payment;
(b) An unused long service leave payment, to the extent that the payment is included in the individual's assessable income.
The definition of "unused long service leave payment" is included at section 83-75 of the Income Tax Assessment Act 1997 (ITAA 1997). It states a payment that you receive in consequence of the termination of your employment is an unused long service leave payment if:
(a) It is for long service leave you have not used; or
(b) It is for long service leave to which you were not entitled just before the employment termination, but that would have been made available to you at a later date if it were not for the employment termination.
When workers are paid, their long service leave entitlements they are paid their contributions plus an interest component. The payments are not in consequence of the termination of their employment therefore the payment doesn't meet the definition of "unused long service leave payment". As not all conditions under section 12-90 are met there is no requirement to withhold from payments made to workers.
No other sections within Part 2-5 (Pay As You Go Withholding) of Sch 1 to the TAA is applicable to either the payment of the return of or to the interest payments.