Issued by authority of the Minister for Revenue
and Assistant Treasurer

Taxation Administration Act 1953

Taxation Administration Amendment Regulations 2006 (No. 1)

Section 18 of the Taxation Administration Act 1953 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the Regulations is to amend regulations 34, 36, 37 and 38 of the Taxation Administration Regulations 1976 (the Principal Regulations), which specify the rates of withholding from certain payments, to reflect the new top personal marginal tax rates, announced in the 2006-07 Budget, which apply from 1 July 2006.

The Regulations have replaced the references to the former individual top marginal tax rate rates in regulations 34, 36, 37 and 38, from 47 per cent or 48.5 per cent (including Medicare levy) to 45 per cent and 46.5 per cent, respectively.  

Sections 12-140 and 12-145 of Schedule 1 to the Act require amounts to be withheld from payments of income in respect of certain investments where a tax file number (TFN) or an Australian Business Number (ABN) are not quoted.  The rate of withholding is prescribed in regulation 34 of the Principal Regulations.  The former top marginal rate is 47 per cent, or 48.5 per cent including the Medicare levy rate of 1.5 per cent.

Subdivisions 12-B to 12-C of Schedule 1 to the Act require amounts to be withheld from payments for work or services, retirement payments, eligible termination payments (ETP), annuities, and from benefit and compensation payments.  The rates of withholding from ETPs required by section 12-85 of Schedule 1 to the Act are prescribed in regulation 36 of the Principal Regulations.  The rates of withholding from other payments where a TFN has not been provided are prescribed in regulation 37 of the Principal Regulations.  The former rates of withholding are 47 per cent from payments to non-residents and 48.5 per cent from payments to residents.

Section 12-190 of Schedule 1 to the Act provides that amounts must be withheld from certain payments for supplies of goods or services when an ABN is not quoted.  The former rate of withholding of 48.5 per cent was prescribed in regulation 38 of the Principal Regulations.

The Government introduced changes to the personal income tax rates and thresholds in Tax Laws Amendment (Personal Tax Reduction and Improved Depreciation Arrangements) Act 2006.  The top personal marginal tax rate has been reduced from 47 per cent to 45 per cent, from 1 July 2006.  As a result of this change the rates of withholding, as described above, have been updated.

Consultation was not undertaken in relation to the Regulations because it is minor or machinery of government in nature and does not substantially change the law.

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulations commence on 1 July 2006.