Income Tax (Withholding Payments) Regulations 1979, Amendment No.6

This commentary item was published in Public Information Bulletin Volume 173, April 1988

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A further amendment to the Income Tax (Withholding Payments) Regulations 1979 has recently been promulgated. This amendment applies to persons who are in receipt of withholding payments and who are also registered for GST.

Prior to this amendment Regulation 6 of the principal Regulations required the payer to deduct withholding tax from the gross amount of the payment inclusive of any GST included in the gross payment. As a result a GST registered person in receipt of withholding payments was subject to a greater amount of withholding tax deduction from the gross income than a non-registered person.

Regulation 6 has now been amended and provides that the payer shall deduct withholding tax from the GST exclusive amount when that payer holds a tax invoice issued by the payee (or the payer under a self-billing arrangement) pursuant to section 24 of the Goods and Services Tax Act 1985. Where such a tax invoice is not held,the payer is obliged to deduct withholding tax from the gross amount of the payment inclusive of any amount of GST charged by the payee.

This amendment will apply in respect of payments made on or after the 1st day of April 1988.