Private ruling: PAYG withholding
Date of advice: 3 July 2019
Published: September 2019
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is the entity required to withhold PAYG withholding amounts under section 12-35 of Schedule 1 to the Taxation Administration Act 1953 from the payment to be made on compassionate grounds to the Australian resident deceased estate? | A1: No. After considering the facts, we accept that there is no obligation on the entity to withhold from the payment to the deceased estate as the deceased's employment never commenced so the payment is not made in their capacity as an employee. Further information on the Commissioner's view can be found in Taxation Ruling TR 2005/16 Income tax: Pay As You Go - withholding from payments to employees.

Relevant facts and circumstances: A worker, who was due to join you as an employee, passed away before they could commence employment. The worker's contract stated that when they commenced employment they would receive a new hire payment to compensate them for the loss of unvested restricted shares, unvested options, deferred cash and/or loss or forfeiture of a bonus due to them leaving their previous employment in order to take up employment with you. Notwithstanding the worker not commencing employment such that there was no contractual obligation to make the new hire payment, you would like to pay an equivalent amount to the deceased's estate in a lump sum as a gift on compassionate grounds. Making of the payment is at your complete discretion.

Relevant legislative provisions: Taxation Administration Act 1953 section 12-35 to Schedule 1