Private ruling: Payment summaries
Published: April 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you required to issue payment summaries to dependents under the age of 18 in accordance with section 16-155 of Schedule 1 to the Taxation Administration Act 1953 (TAA)? | A1: Yes

Relevant facts and circumstances: You make compensation payments to dependents under section 12-120 of Schedule 1 to the TAA. The payments are calculated on a periodical basis and paid quarterly. The quarterly benefit payments must be made to a trust bank account if the dependent is under the age of 18. Generally, the total payments made to any one individual under the age of 18 would be less than the tax free threshold over a financial year.

Relevant legislative provisions: Taxation Administration Act 1953 Section 16-155 of Schedule 1 | Taxation Administration Act 1953 Section 12-120 of Schedule 1 | Taxation Administration Act 1953 Section 16-180 of Schedule 1

Reasons for decision: Summary: Section 16-155 of Schedule 1 to the Taxation Administration Act 1953 (TAA) provides that an entity (the payer) must provide a payment summary to an entity (the recipient) that it makes one or more withholding payments to. This is a requirement even if the amount withheld from the withholding payment is nil. A withholding payment is any payment or transaction that is covered by Pay As You Go (PAYG) withholding and includes payments covered by section 12-120 of Schedule 1 to the TAA. Section 12-120 of Schedule 1 to the TAA relates to payments of compensation, or of sickness or accident pay, made to an individual if: • the payment is made because of that or another individual's incapacity for work • the payment is calculated at a periodical rate; and • the payment is not a payment made under an insurance policy to the policy owner. You make payments to individuals under the age of 18 that meet the requirements of section 12-120 of Schedule 1 to the TAA and are therefore withholding payments. The Commissioner may exempt an entity from the requirement to provide a payment summary under section 16-180 of Schedule 1 to the TAA. In this case, the payments will be assessable to the recipients and the recipients may be in receipt of other income that would result in their total assessable income being above the tax free threshold. Accordingly, it would be inappropriate for the Commissioner to provide an exemption in this case. Accordingly, where you make compensation payments to dependents under the age of 18, you are required to provide them with a payment summary in accordance with Section 16-155 of Schedule 1 to the TAA.