Legislation and regulations update - Reduction to PAYG withholding rates where ABN or TFN is not quoted

Just before the end of the Parliamentary Budget sittings, two new tax Bills, Tax Laws Amendment (2006 Measures No 4) Bill 2006 and Tax Laws Amendment (Repeal of Inoperative Provisions) Bill 2006 were introduced into Federal Parliament. In addition, several amendments have been made to the income tax regulations recently, primarily as a result of the new personal income tax rates applicable from 1 July 2006, and the new fringe benefits tax rate applicable from 1 April 2006. We review these legislative and regulatory changes below. Parliament will resume for the Spring sittings on 8 August 2006.

• Demergers, NZ imputation and marriage breakdown roll-overs
• Repeal of inoperative law - the easy part
• Reduction to PAYG withholding rates where ABN or TFN is not quoted
• Adjustment for change in FBT rate
• Certain individual and small business taxpayers excluded from two year amendment period

Reduction to PAYG withholding rates where ABN or TFN is not quoted

Amendments made to the income tax regulations will ensure that the rates of withholding from payments for which tax file numbers and Australian Business Numbers are not quoted align with the new top personal marginal tax rates (which apply from 1 July 2006).

The previous withholding rates of 47 per cent or 48.5 per cent (including Medicare levy) have been reduced to 45 per cent and 46.5 per cent, respectively.

The amended regulations commence from 1 July 2006.

For further information please contact your usual PricewaterhouseCoopers adviser.