Private ruling: PAYG Withholding
Date of advice: 16 February 2016
Published: April 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you required to withhold an amount referred to as "No ABN withholding" under Division 12 of Schedule 1 to the Taxation Administration Act 1953 (TAA) from a payment to an entity that provides a Statement by a Supplier in each of the 12 scenarios provided? | A1: No

Relevant facts and circumstances: Scenario 1 - Once off payment for one day's service - sports The school is the district coordinator responsible for conducting a sporting competition in its district. The district finals are conducted on one day. The school must arrange for individuals to referee the finals between the top teams. The school engages individuals under a contract. None of the individuals are registered with an ABN. The individuals are higher learning institute students who play the sport. The school has never dealt with the individuals before. The individuals are paid for their service of umpiring for the day. Each of the individuals provides a signed Statement by Supplier to the school. Scenario 2 - Payment for service (X hours per week over X weeks in 1 term); once off The school is the coordinator responsible for conducting a sporting competition in its district. The competition is played over a number of weeks, for a number of hours, on one day per week. The school must arrange individuals to act as umpires for the number of weeks (specified hours per week - total X hours over a number of weeks) The school engages individuals under a contract. None of the individuals are registered with an ABN. The individuals are higher learning students who play the sport. The school has never dealt with the individuals before. The individuals are paid for their service of umpiring a number of games per week. Each of the individuals provides a signed Statement by Supplier to the school before providing any services. Scenario 3 - Payment for services (X hours per week over X weeks over X terms); once-off. The school is the coordinator responsible for conducting: • A sporting competition in its district for a Term, and • A sporting competition in its district for the last school Term. The competitions are staged over a number weeks, for a number of hours on one day per week at local venues. The school must arrange umpires and officials for the period of weeks (a number of hours per week) for each competition for the terms. The school engages individuals under a contract. None of the individuals are registered with an ABN. The individuals are retired teachers who have an interest in all sports. The school has never dealt with the individuals before. The individuals are paid for their service of umpiring and supervising the sporting activities. Each of the individuals provides a signed Statement by Supplier to the school before providing any services. Scenario 4 - Payment for services (X hours per week over X weeks over X terms); for the last X years. The school is the coordinator responsible for conducting: • A sporting competition in its district, and • A sporting competition in its district for the last school Term. The competitions are staged over a number of weeks, for a number of hours on one day per week at local venues. The school must arrange umpires and officials for the a number of weeks (a number of hours per week) for each competition for the terms. The school engages individuals under a contract. None of the individuals are registered with an ABN. The individuals are higher learning students who have an interest in all sports. The school has used the same individuals for the last few years to conduct the sporting competitions. The individuals are paid for their service of umpiring and supervising the sporting activities. Each of the individuals, provide a signed Statement by Supplier to the school before providing any services. Scenario 5 - Payment for services (X hours per week, over X weeks, over X terms); once-off The school is the coordinator responsible for conducting: • A sporting competition in its district for Term One, • A sporting competition in its district for Term Two, • A sporting competition in its district for Term Three, and • A sporting competition in its district for the last school Term. The competitions are staged over a number of weeks, for a number of hours on one day per week at local venues. The school must arrange umpires and officials for the number of weeks (a number of hours per week) for the competition that is conducted in each term. The school engages individuals under a contract. None of the individuals are registered with an ABN. The individuals are higher learning students studying, and who have an interest in all sports. The individuals are for their service of umpiring and supervising the sporting activities. Each of the individuals provides a signed Statement by Supplier to the school before providing any services. Scenario 6 - Payment for services (X hours per week, over X weeks in one term); once-off but anecdotal evidence of additional services. The school is the coordinator responsible for conducting a sporting competition in its district for a school Term. The competition is played over a number of weeks, for a number of hours, on one day per week at local venues. The school must arrange umpires for the number of weeks (a number of hours per week) for the term. The school engages individuals under a contract. None of the individuals are registered with an ABN. The individuals are higher learning students who play the sport. The school has used the same individuals for the last few years to conduct the competition. At a coordinator meeting of all districts in the region, the school discovered that the same individuals are providing the same services at other schools in the district in the same region. The individuals are paid for their service of umpiring and supervising the games. The school assumes that they are being paid by other schools in the district as well. Each of the individuals provides a signed Statement by Supplier to the school before providing any services. Scenario 7- Payment for service (X hours per week, over X weeks, in one term); for the last few years. The school is a school which received funding from a government program. Under the program the school will run an after-hours sports program for its students for the term. The school has chosen to run a sporting program. The school chooses a coach who has met the requirements of the program. The school engages the individual under a contract. The individual is not registered with an ABN. The individual is a retired tradesman who is a member of the local sporting club. The school has used the same individual for the last few years to run a similar program. The individual is paid for their service of organising the sporting program. The individual provides a signed Statement by Supplier to the school before providing any services. Scenario 8 - Payment for service (X hours per week, over X weeks, across X terms); for the last few years. The school is a local school in a rural area which received funding a government program. Under the program the school will run an after-hours sports program for each school term. The school chooses to run • A sporting program in Term One, • A sporting program in Term Two, • A sporting program Term Three, and • A sporting program for the last school Term. The school has trouble obtaining coaches for this program due to its location. The school has chosen a coach who has agreed to run the programs for the four school terms and who has met the requirements of the program. The school engages the individual under a contract. The individual is not registered with an ABN. The individual is a retired teacher who has an interest in sports. The school has used the same individual for the last few years to run a similar program. The individual is paid for their service of organising the various programs. The individual provides a signed Statement by Supplier to the school before providing any services. Scenario 9 - Once off payment for one day's services - Musician The school is conducting its school musical concert at the end of the school year. The school must arrange a musician to accompany the students at the school concert. The school engages a musician under a contract. The musician is not registered with an ABN. The musician is a known person at the school and is happy to help out. The school has never dealt with this person before. The musician is paid for their service at the school concert as well as rehearsals for the day. The musician provides a signed Statement by Supplier to the school before providing any services. Scenario 10 - Payment for services (X hours per week over X weeks in one term); once-off. A number of students at the school want to learn a musical instrument, so the school agrees to add this to the curriculum. The school arranges for a retired teacher to teach the musical instrument to the students who chose this elective. The classes run during breaks in Term One on school grounds, X per week for one hour (X hours per week- total X hours over X weeks). The school engages the individual under a contract. The retired teacher is not registered with an ABN. The individual is a retired teacher who plays an instrument in a band. The school has never dealt with this retiree before. The individual is paid for their service of teaching the instrument to students X per week. The individual provides a signed Statement by Supplier to the school before providing any services. Scenario 11 - Payment for services (X hours per week over X weeks in one term); for the last few years. The school has for a number of years run a program of teaching an instrument to students as an elective. The school arranges for a local student to teach an instrument to the students who choose this elective. The classes run during break times in Term one on school grounds, X per week for one hour (X hours per week - total X hours over X weeks) The school engages the individual under a contract. The student is not registered with an ABN. The individual is a student who plays the instrument in a local band. The school has dealt with the same student for the last few years. The individual is paid for their service of teaching the instrument to students X per week. The individual provides a signed Statement by Supplier to the school before providing any services. Scenario 12 - Payment for services (X hours per week, over X weeks, across four terms); once-off The school has decided to establish a music program to expand its curriculum. The curriculum will involve X different specialties across each school term: • Instrument one in Term One, • Instrument two in Term Two, • Instrument three in Term Three, and • Instrument four in the last school term. Students will be able to participate in whatever instrument specialty they would like (including all four). The school has engaged a local musician (who is also known at the school) to run the classes. Classes will take place during break times each Term on school grounds, X per week for one hour (X hours per week, over X weeks, for four terms). The school engages the individual under a contract. The person is not registered with an ABN. The person works X mornings per week, volunteers X afternoons per week and plays in a local band. The school has never dealt with this individual before. The individual is paid for their service of teaching musical instruments to various students, X per week. The individual provides a signed Statement by Supplier to the school before providing any services.

Relevant legislative provisions: Taxation Administration Act 1953 section 10-5 of Schedule 1 | Taxation Administration Act 1953 subsection 12-190(4) of Schedule 1 | Taxation Administration Act 1953 subsection 12-190(5) of Schedule 1 | Taxation Administration Act 1953 subsection 12-190(6) of Schedule 1

Reasons for decision: Summary: The PAYG withholding system, contained in Part 2-5 in Schedule 1 to the TAA 1953, was introduced for paying instalments during the income year towards an expected income tax liability for any business and investment income. The table in section 10-5 in Schedule 1 to the TAA 1953 provides a summary of payments and other transactions covered by PAYG. Where a supplier does not provide their ABN or a statement that they are not carrying on an enterprise, the payer should withhold 46.5% of the payment unless one of the exceptions in subsections 12-190(4 ) to (6) of Schedule 1 to the TAA 1953 applies. You do not need to withhold an amount from a payment if the supplier is an individual and has given you a written statement that states the supply either: • Relates to a private recreational pursuit or hobby; or • Is wholly of a private or domestic nature for that supplier However, you should withhold if you have reasonable grounds to believe that the statement supplied is false or misleading. In your case, each scenario has the individuals providing a supply to the school in the form of music lessons or sporting programs. The individuals have all provided a "Statement by a supplier" and the supply is made in the course of furtherance of an activity done as a private recreational pursuit or hobby, or it is made wholly of a private or domestic nature, and the school has no reason to believe the statement is false or misleading, the school will not be penalised if it is subsequently found that a false or misleading statement was made. The onus of making a true statement on the "Statement by a supplier" form is on the supplier and not the school. Ultimately the supplier is making the declaration by supplying the statement. Penalties may be applied to the supplier if the statements made are false or misleading. In your case, in each scenario, all of the individuals have provided a "Statement by a supplier". You have no evidence that any of the individuals have provided false or misleading information. As such, you will not need to withhold an amount from payments to these individuals.