Private ruling: PAYG withholding
Date of advice: 23 December 2024
Published: 24 February 2025
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Is there an obligation on the Taxpayer to withhold from payments made to individuals for activities through a pastime or hobby under section 12-35 of Schedule 1 of the Taxation Administration Act 1953 ? | A1: No.

Relevant facts and circumstances: The Taxpayer is a not-for-profit sporting organisation. It is affiliated to around XX sporting associations and is responsible for organising and managing a competition. Their aim is to provide a competitive environment where members can reach their potential by providing the best possible developmental pathways for athletes in XX Australia. Athletes have the opportunity to play at both national and international levels through the Taxpayer's affiliation with the sporting organisation. The Taxpayer engages individuals (Officials) like coaches, umpires and other positions to assist with ongoing game operations. The Taxpayer has agreements with the Officials to assist with the ongoing sporting operation and the Officials receive a remuneration for their participation. The remuneration is up to $X,XXX per annum and the amount varies from position to position. All the Officials provide a 'Statement by Supplier' to indicate their position as a recreation or hobby. The 'Statement by supplier' is to be completed annually to ensure any changes in circumstances are noted. Any changes of circumstances where the payment is no longer a recreation or hobby, it is the responsibility of the Officials to ascertain and to notify the Taxpayer in writing. Some of the Officials are required to wear the uniform provided by the Taxpayer when carrying out their duties. The Taxpayer provides Officials tablets and umpire alerts, cameras etc to use on the game day. However, these Officials are required to incur expenditure upon telephone, stationery, uniforms, shoes, whistles and correspondence. The Officials may receive a travel allowance for all non-metro-based travel and a meal allowance for all regional area visits of between $XX to $XX per day.

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

Reasons for decision: Summary: Division 12 in Schedule 1 of the Taxation Administration Act 1953 (TAA) outlines the situations where a paying entity is obliged to withhold part of an amount paid to another entity. The withheld amount is referred to as PAYG Withholding. PAYG withholding must be withheld where a payment of salary, wages, commission, bonus or allowance is made to an individual as an employee or office holder. An entity is not required to withhold from a payment where the whole of the payment is not included as part of the recipient's assessable income. Taxation Ruling TR 1999/17 discusses the Commissioner's views on whether receipts and other benefits paid to sportspeople are assessable income. The ruling states that a payment or other benefit received by a sportsperson is assessable income if it is: • income in the ordinary sense of the word, or • an amount or benefit that through the operation of the provisions of the tax law is included in assessable income. This includes non-cash benefits that may not be ordinary income. However, where a person's sporting activities constitute a recreation or hobby rather than an income-producing activity, money and other benefits received from the pursuit of that recreation and hobby are not assessable income, nor are the expenses allowable deductions. Participation in activities generating recreation or hobby receipts is a social or personal pursuit of a non-commercial nature. The receipts are not intended to, nor do they usually, cover expenses. Even regular receipts obtained from a recreation or hobby are still characterised as receipts from a recreation or hobby and accordingly are not assessable income. In this case, the Taxpayer make payments to the Officials to promote the sport and provide possible developmental pathways for athletes in XX Australia. The Officials who are pursuing an interest in the game and do not rely on the payments to cover their regular living expenses. Therefore, the payments the Officials receive will be considered receipts relating to a recreation or hobby and the payments will not form part of their assessable income. There are circumstances payers are not required to withhold an amount from a payment where no ABN has been provided by a supplier: • the supplier is an individual and has given the payer a written statement declaring that they are either involved in the activity as a private recreational pursuit or hobby or their involvement in the activity is purely private or domestic in nature • the payer has no reasonable grounds to believe that the statement is false or misleading in a material particular. Consequently, where the Officials provide a written statement stating they are providing their services as part of the pursuit of a private recreational pursuit or hobby, there is no obligation on the Taxpayer to withhold from payments made to the Officials.