Taxation Determination

TD 94/35W

Income tax: during the course of a year of income, may the Commissioner of Taxation refund to an employer excess tax instalment deductions (TIDs) paid by the employer under the pay-as-you-earn (PAYE) arrangements, where the excess TIDs, mistakenly, were not made in accordance with the rates prescribed?

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Notice of Withdrawal

Taxation Determination TD 94/35 is withdrawn with effect from today.

1. This Determination explained that while there was no express power in Division 2 of Part VI of the Income Tax Assessment Act 1936 to refund excess TIDs, the High Court of Australia in David Securities Pty Ltd & Ors v. Commonwealth Bank of Australia (1992) 175 CLR 353; 92 ATC 4658; (1992) 24 ATR 125, indicated that moneys paid under a mistake of fact or law are refundable to the payer. This decision enabled the Commissioner to refund to an employer excess TIDs which were mistakenly paid during the course of a year of income.

2. The Pay As You Go (PAYG) withholding system, which expressly provides relevant refund rules under Subdivision 18-B of Schedule 1 to the Taxation Administration Act 1953, replaced the PAYE system for the 2000-2001 income year and later income years.

3. Accordingly, this Taxation Determination is no longer current.

Commissioner of Taxation
16 July 2008

References

ATO references:
NO 2006/20258

Subject References:
mistake
overpayment
tax instalment deductions
lump sum payment

Legislative References:
ITAA Pt VI Div 2
ITAA 221D
ITAA 221F(5)
ITAA 221H

Case References:
David Securities Pty Ltd & Ors v. Commonwealth Bank of Australia
(1992) 175 CLR 353