ownership of the land with the actual period of ownership of the associated person from whom they acquired the land. The intent is that the disposal would not be taxed if this combined period of ownership was 10 years or more. One interpretation is that the associated person’s relief rule can be applied to a series of sequential transfers of land between associated persons (a circle of association). This interpretation results in the 10-year period being determined from the first date the land was acquired within that circle of association. This interpretation is inconsistent with the policy intent and can result in under-taxation. The proposed amendment clarifies that the relief rule applies only to a combined ownership period of the vendor and the associated person from whom the vendor acquired the land. (Clause 199) Summary of proposed amendment The proposed amendment corrects an unintended legislative change in section RD 17 that potentially results in too much PAYE being withheld from an extra pay. Application date The proposed amendment will apply from the beginning of the 2008–09 income year. Key features The calculation of PAYE to be withheld from an pay (for example, a performance bonus) is determined by a calculation of an average rate of tax on an annualised amount of PAYE income payments based on: the amount of the extra pay; and all regular wages and salaries paid in the four weeks prior to the date of the extra pay. This annualised calculation is not intended to take into account any other amounts of extra pay that may have been made in that four week period. The rewrite of this provision into the Income Tax Act 2007 inadvertently includes all previous amounts of extra pay within that four week period when calculating the annualised amount. This inadvertent drafting change could result in too much PAYE being withheld. The proposed amendment restores the intended effect and confirms current practice.
ownership of the land with the actual period of ownership of the associated person from whom they acquired the land. The intent is that the disposal would not be taxed if this combined period of ownership was 10 years or more. One interpretation is that the associated person’s relief rule can be applied to a series of sequential transfers of land between associated persons (a circle of association). This interpretation results in the 10-year period being determined from the first date the land was acquired within that circle of association. This interpretation is inconsistent with the policy intent and can result in under-taxation. The proposed amendment clarifies that the relief rule applies only to a combined ownership period of the vendor and the associated person from whom the vendor acquired the land. (Clause 199) Summary of proposed amendment The proposed amendment corrects an unintended legislative change in section RD 17 that potentially results in too much PAYE being withheld from an extra pay. Application date The proposed amendment will apply from the beginning of the 2008–09 income year. Key features The calculation of PAYE to be withheld from an pay (for example, a performance bonus) is determined by a calculation of an average rate of tax on an annualised amount of PAYE income payments based on: the amount of the extra pay; and all regular wages and salaries paid in the four weeks prior to the date of the extra pay. This annualised calculation is not intended to take into account any other amounts of extra pay that may have been made in that four week period. The rewrite of this provision into the Income Tax Act 2007 inadvertently includes all previous amounts of extra pay within that four week period when calculating the annualised amount. This inadvertent drafting change could result in too much PAYE being withheld. The proposed amendment restores the intended effect and confirms current practice.
2018-commentary-armtarm-bill.docx