Exemption certificates

The amendment corrects section 24M(5) of the Tax Administration Act 1994, as recommended by the Rewrite Advisory Panel. The Panel’s concern was that section 24M(5) could be read as being in conflict with section 24M(1), effectively negating the use of an exemption certificate issued under section 24M(1). This exemption certificate relieves the payer of schedular payments of the obligation to withhold tax from the payment.

Section 24N(5) is consequentially amended, as it contains a similar ambiguity.

The amendments to both sections 24M and 24N ensure that:

• subsection (5) in each provision does not override the effect of subsection (1), to prevent a zero rate of withholding from being applied to schedular payments; and
• a person commits a knowledge offence, under section 143A of the Tax Administration Act 1994, if the person alters an exemption certificate or special rate certificate issued by the Commissioner in relation to schedular payments; and
• a person commits a knowledge offence, under section 143A of the Tax Administration Act 1994, if the person uses or attempts to use an exemption certificate, that has expired or been cancelled by the Commissioner, to obtain a zero rate of withholding from schedular payments made to the person; and
• a person commits a knowledge offence, under section 143A of the Tax Administration Act 1994, if the person uses or attempts to use a special tax rate certificate, that has expired or been cancelled by the Commissioner, to obtain a rate of withholding for schedular payments less than the rate set out in Schedule 4, Part C, clause 1(b) of the Income Tax Act 2007.