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16 May 2019 A PAYG case on the issue of withholding

Price v Commissioner of Taxation [2019] FCA 543 (18 April 2019) 


These proceedings were brought under s 39B of the Judiciary Act 1903 (Cth). The case concerns withholding payments in terms of Ch 2 of Sch 1 of the Tax Administration Act 1953. The applicant (Price) sought to have tax amounts said to have been withheld from his wages, available to him to be applied as a tax credit against his liability for income tax. The Court held that the employer did not withhold tax in respect of those wages. 


Price was employed as a truck driver between 1 July 2000 and 30 June 2016 by four different entities (employer), each controlled by his brother. Price’s duties and activities never changed. Price believed that each employer would pay the relevant taxes in respect of his wages and contributing to his superannuation. When wages were paid, Price did not receive payslips or annual PAYG summaries. He repeatedly asked for them. Price only lodged tax returns for the 16 years under consideration in September 2016. The returns were all lodged at the same time. 


The case follows the findings of Cassaniti v FCT (2010) 186 FCR 480; Cassaniti v FCT (2018) 107 and FCT v Cassaniti [2018] FCAFC 212. Summarised as follows:

  • The act of withholding must be contemporaneous with the payment of wages.
  • The word ‘withholding’ is not defined in the Act. In this context, it means ‘… the holding back of something due to the employee, resulting in the reduction of a gross amount to a net amount which is paid to the employee’…. Evidenced by (a) actual funds held by the payer on behalf of the employee pending payment to the Commissioner, or (b) as accounting entries in the payer’s wage records and books of account.
  • Where the withholding is reflected in accounting entries, whether withholding has occurred will depend upon examination of the books and records and the surrounding circumstances. A mere journal entry in the absence of other evidence may not be sufficient evidence.
  • An individual is only entitled to a credit where the amounts have been withheld and then only the amount actually withheld. 


The Court held that it did not see evidence of any ‘Payment Summary Annual Reports’ or PAYG payment summaries created ‘contemporaneously with the end of the appropriate financial year’ or wage records. Price was found not to have discharged the onus of proving that tax had been withheld in respect of his wages.


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