Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS  

Division 26 - Some amounts you cannot deduct, or cannot deduct in full  

Operative provisions  

SECTION 26-105   Non-compliant payments for work and services  

No deduction if amount not withheld or Commissioner not notified

26-105(1)    
You cannot deduct under this Act a payment if:

(a) any of the following provisions in Schedule 1 to the Taxation Administration Act 1953 require you to withhold an amount from the payment:

(i) section 12-35 (about payments to employees);

(ii) section 12-40 (about payments to directors);

(iii) section 12-47 (about payments to *religious practitioners);

(iv) section 12-60 (about payments under labour hire and certain other arrangements);

(v) in relation to a *supply, other than a supply referred to in subsection (3) of this section - section 12-190 (about quoting of *ABN); and

(b) either:

(i) you fail to withhold an amount (whether or not that amount is the amount required to be withheld as mentioned in paragraph (a)) from the payment; or

(ii) after withholding the amount from the payment, you fail to comply, or purportedly comply, with section 16-150 or 389-5 (as the case requires) in that Schedule, in relation to the amount.

26-105(2)    
You cannot deduct under this Act a *non-cash benefit if:

(a) section 14-5 in Schedule 1 to the Taxation Administration Act 1953 requires you to pay an amount to the Commissioner before providing the benefit, because of any of the following provisions in that Schedule:

(i) section 12-35 (about payments to employees);

(ii) section 12-40 (about payments to directors);

(iii) section 12-47 (about payments to *religious practitioners);

(iv) section 12-60 (about payments under labour hire and certain other arrangements);

(v) in relation to a *supply, other than a supply referred to in subsection (3) of this section - section 12-190 (about quoting of *ABN); and

(b) you fail to comply, or purportedly comply, with section 16-150 in that Schedule in relation to the amount.

26-105(3)    
For the purposes of subparagraphs (1)(a)(v) and (2)(a)(v), the supplies are supplies that are wholly a *supply of either or both of the following:

(a) a supply of goods (within the meaning of section 195-1 of the *GST Act);

(b) a supply of real property (within the meaning of that section of that Act).

Exception - nil amounts

26-105(4)    
Subsection (1) or (2) does not apply if the amount required to be withheld, or the amount required to be paid to the Commissioner, (as the case requires) is a nil amount.

Exception - ABN quoted

26-105(5)    
Subsection (1) does not apply in relation to an amount required to be withheld from a payment under section 12-35 in Schedule 1 to the Taxation Administration Act 1953 , if:

(a) when the payment is made, you have been given:

(i) an *invoice or some other document that relates to the payment that *quotes the individual ' s *ABN; or

(ii) if the payment relates to a *supply that has been made through an *agent - an invoice or some other document that relates to the payment that quotes the agent ' s ABN; or

(b) when the payment is made:

(i) you have been given an invoice or some other document that relates to the payment that purports to quote the individual ' s ABN; and

(ii) the individual does not have an ABN, or the invoice or other document does not in fact quote the individual ' s ABN; and

(iii) you have no reasonable grounds to believe that the individual does not have an ABN, or that the invoice or other document does not quote the individual ' s ABN; or

(c) if the payment relates to a supply that has been made through an agent - when the payment is made:

(i) you have been given an invoice or some other document that relates to the payment that purports to quote the agent ' s ABN; and

(ii) the agent does not have an ABN, or the invoice or other document does not in fact quote the agent ' s ABN; and

(iii) you have no reasonable grounds to believe that the agent does not have an ABN, or that the invoice or other document does not quote the agent ' s ABN.

26-105(6)    
Subsection (2) does not apply in relation to a *non-cash benefit that requires an amount to be paid to the Commissioner, if:

(a) when the non-cash benefit is provided, you have been given:

(i) an *invoice or some other document that relates to the non-cash benefit that *quotes the individual ' s *ABN; or

(ii) if the non-cash benefit relates to a *supply that has been made through an *agent - an invoice or some other document that relates to the non-cash benefit that quotes the agent ' s ABN; or

(b) when the non-cash benefit is provided:

(i) you have been given an invoice or some other document that relates to the non-cash benefit that purports to quote the individual ' s ABN; and

(ii) the individual does not have an ABN, or the invoice or other document does not in fact quote the individual ' s ABN; and

(iii) you have no reasonable grounds to believe that the individual does not have an ABN, or that the invoice or other document does not quote the individual ' s ABN; or

(c) if the non-cash benefit relates to a supply that has been made through an agent - when the non-cash benefit is provided:

(i) you have been given an invoice or some other document that relates to the non-cash benefit that purports to quote the agent ' s ABN; and

(ii) the agent does not have an ABN, or the invoice or other document does not in fact quote the agent ' s ABN; and

(iii) you have no reasonable grounds to believe that the agent does not have an ABN, or that the invoice or other document does not quote the agent ' s ABN.

Exception - voluntarily tell the Commissioner about a mistake

26-105(7)    
Subsection (1) does not apply if, before the Commissioner tells you that an examination is to be made of your affairs relating to a *taxation law for a relevant period, you voluntarily tell the Commissioner, in the *approved form, that you have failed to:

(a) withhold an amount; or

(b) comply with section 16-150 or 389-5 (as the case requires) in Schedule 1 to the Taxation Administration Act 1953 in relation to the amount.

26-105(8)    
Subsection (2) does not apply if, before the Commissioner tells you that an examination is to be made of your affairs relating to a *taxation law for a relevant period, you voluntarily tell the Commissioner, in the *approved form, that you have failed to comply with section 16-150 in Schedule 1 to the Taxation Administration Act 1953 in relation to the amount.