Private ruling: PAYG Withholding
Date of advice: 14 July 2016
Published: August 2016
Ruling period: Year ending 30 June 2016 | Year ending 30 June 2017
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 | A1: No

Relevant facts and circumstances: You are a mortgage broker firm and offer cash rebates to clients who set up a loan. The loan applicants are taxpayers applying for a home loan or residential investment loan. The cash rebate is paid after the loan is settled. The loan applicants sign a "statement by supplier". The payment made to the loan applicants is of a private or domestic nature or wholly input taxed.

Relevant legislative provisions: Taxation Administration Act 1953 ( TAA) Sections 12-190

Reasons for decision: Summary: 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 has given you a written statement that states the supply either: • Relates to a private recreational pursuit or hobby; • Is wholly of a private or domestic nature for that supplier; or • Is wholly input taxed However, you should withhold if you have reasonable grounds to believe that the statement supplied is false or misleading. In your case, the applicants will receive the cash rebate after settlement of a loan. The applicants will provide a "Statement by a supplier" and the supply is made wholly of a private or domestic nature. Provided you haves no reason to believe the statement is false or misleading, you 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 you. 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. It is noted that you asked for the private ruling to apply for the 2015-16 income year and onwards. The Commissioner does not rule for indefinite or extended periods as there may be changes to the facts of the arrangement or the law in question. Also, a public ruling may issue which affects the private ruling.