Private ruling: withholding from payments
Published: June 2012
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ending 30 June 2012 | Year ending 30 June 2013
Date scheme commenced: 1 July 2009

Ruling: Q1: Are payments made to the councillors of the entity subject to PAYG legislation? | A1: Yes (provided none of the exceptions apply to any particular individual)


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 995-1 | Taxation Administration Act 1953 Section 12-40 of Schedule 1 | Taxation Administration Act 1953 Section 12-1 of Schedule 1

Reasons for decision: Summary: Division 12 of the Taxation Administration Act 1953 (TAA) discusses payments from which amounts must be withheld. Section 12-40 of the TAA discusses payments to company directors. It states a company must withhold an amount from a payment of remuneration it makes to an individual: · if the company is incorporated - as a director of the company, or as a person who performs the duties of a director of the company; or · if the company is not incorporated - as a member of the committee of management of the company, or as a person who performs the duties of such a member. Section 12-1 of the TAA outlines the general exceptions to payments from which amounts must be withheld. These exceptions include exempt income of the recipient, non-assessable non-exempt income of the recipient, living away from home allowance benefit and an expense payment benefit. Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) states a company is a body corporate or any other unincorporated association or body of persons but does not include a partnership or a non-entity joint venture. In application to this case, the entity meets the definition of a company as it is an unincorporated body of persons. It also makes a payment of remuneration to individual members of the committee of management (councillors). Therefore it must withhold an amount from a payment it makes to each of its councillors, provided none of the exceptions under section 12-1 of the TAA apply. This can only be ascertained on an individual to individual basis.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: The entity makes payments to its councillors for their services. | Each of the councillors of the entity performs as a member of the committee of management.