13 Feb 1515
More from Member 1 on reactivating withholding status
In last week's TAXVINE (see 2015 TAXVINE No 3 (6 February 2015)), the ATO responded to Member1's comments in 2015 TAXVINE No 1 (23 January 2015) about a client whose withholding status was reactivated with their previous remitter status (medium), notwithstanding that a change in circumstances meant that their new status would be different (small). Member 1 now responds to the ATO response:
"I refer to the ATO's response which said:
'Firstly, the client was correctly reregistered as a monthly payer. This requirement follows from s.16-100 of Schedule 1 to the Taxation Administration Act, 1953. The section states that an entity will be a medium withholder, with a monthly payment cycle if:
'The amounts withheld by the entity in a financial year ending before the current month exceeded $25,000.'
That is, if the threshold was exceeded at any time in the past, a monthly cycle applies.'
I note that the application of PAYG withholding status was lodged in Oct 2014 to be effective from Nov 2014 (hence 14/15 FY), and a quick check of BASs lodged in FY13/14 indicates PAYGW for that FY was 13.3K which does not exceed 25K!! The payments were made over a three month period so there may be a prorating to the full year within the ATO. BUT, surely this is wrong as only the actual amounts are pertinent according to the section quoted above by the ATO.
So, the saga continues, the section quoted by the ATO would indicate to me that the ATO has not followed the section."
And Member 1 has just sent this post script:
"ATO reply, today (11 February 2015) we received advice from the ATO that the payment cycle was changed from monthly to quarterly as requested in application. The one concern that I do have is that the ATO letter is dated 05 January 2015 and received on 11 February 2015, surely this is an indication of problems somewhere in the system.
At least this matter is now resolved."