Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-42 - PERSONAL SERVICES INCOME  

Division 86 - Alienation of personal services income  

Subdivision 86-A - General  

SECTION 86-40   Salary payments shortly after an income year  

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 ).