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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-42 - PERSONAL SERVICES INCOME    View history reference

Division 86 - Alienation of personal services income    View history reference

Subdivision 86-A - General    View history reference

SECTION 86-40  Salary payments shortly after an income year  

 View history reference

86-40(1)  

If:


(a) before the end of 14 July in a particular income year, you receive, as salary or wages, *personal services income of yours from the *personal services entity; and


(b) failure to make the payment before the end of 14 July would have resulted in an amount of income being included in your assessable income under section 86-15 for the preceding income year;

you are taken to have received the payment on 30 June of that preceding income year.

Example:

Continuing example 2 in section 86-20: Assume that NewIT is a small withholder for PAYG withholding purposes, and its PAYG payment period covering April 2001 to June 2001 is the quarter ending on 30 June 2001. NewIT's income for that period (after taking into account any reductions under sections 86-20 and 86-25) includes $20,000 that is Ron's personal services income, and NewIT pays this to Ron on 12 July 2001.

The $20,000 that Ron receives is assessable income for the income year ended on 30 June 2001.

86-40(2)  

However, this section does not affect the time at which the *personal services entity is treated as having paid the salary or wages.

Note 1:

Therefore neither the timing of the entity's deduction for the payment, nor the timing of the obligation to withhold amounts under section 12-35 in Schedule 1 to the Taxation Administration Act 1953, is affected.

Note 2:

However, these payments are treated as relating to the preceding income year for the purposes of the rules relating to payment summaries, PAYG credits and PAYG withholding non-compliance tax (see Subdivisions 16-C, 18-A and 18-D in Schedule 1 to the Taxation Administration Act 1953).


 



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