{"id":"F2017L00390","name":"PAYG Withholding variation for foreign resident capital gains withholding payments – income tax exempt entities","slug":"payg-withholding-variation-for-foreign-resident-capital-gains-withholding-payments-income-tax-exempt","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":96116,"registerId":"commonwealth-F2017L00390-current","compilationNumber":null,"startDate":"2026-04-02","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"PAYG Withholding variation for foreign resident capital gains withholding payments – income tax exempt entities","content":"Legislative Instrument\n\nPAYG Withholding variation for foreign resident capital gains withholding payments –income tax exempt entities\n\nI, Emma Rosenzweig, Deputy Commissioner of Taxation, make this variation under subsection 14-235(5) of Schedule 1 to the Taxation Administration Act 1953.\n\nDeputy Commissioner of Taxation\n\nDated: 9 March 2017\n\n1.  Name of instrument\n\nThis determination is the PAYG Withholding variation for foreign resident capital gains withholding payments – income tax exempt entities.\n\n2. Commencement\n\nThis instrument commences on the day after its registration on the Federal Register of Legislation.\n\n3. Application\n\nThis instrument applies to payments covered by section 14-200 of Schedule 1 to the Taxation Administration Act 1953, where the entity provides to the purchaser:\n\n    (i) evidence of a private binding ruling issued by the Australian Taxation Office confirming that the entity is income tax exempt that is valid for the year in which the transaction is occurring; or\n    (ii) documentation showing that the entity is endorsed for income tax exemption as a registered charity under item 1.1 of section 50-5 of the Income Tax Assessment Act 1997.\n\n4. Determination\n\nThe amount to be paid to the Commissioner in relation to transactions covered by this instrument is varied to nil.\n\n5. Definitions\n\n    Income tax exempt entity – exempt entity is defined under subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997) which means an entity all of whose \\*ordinary income and \\*statutory income is exempt from income tax because of this Act or because of another \\*Commonwealth law, no matter what kind of ordinary income or statutory income the entity might have; or an \\*untaxable Commonwealth entity.\n\nOther terms used in this legislative instrument have the same meaning as defined in the:\n\n Income Tax Assessment Act 1997, or\n\n Taxation Administration Act 1953","sortOrder":0}],"analysis":{"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":2,"scope_assessment":{"changed":false,"description":"This legislative instrument performs exactly the narrow function it was designed for: creating a specific exemption from foreign resident capital gains withholding for income tax exempt entities. It has not expanded beyond its original purpose."},"complexity_factors":["Very short document (5 sections, approximately 250 words)","Only 1 defined term ('income tax exempt entity'), which simply references an existing definition in the Income Tax Assessment Act 1997","No nested conditions or exceptions — the application test is a straightforward two-pronged test (private ruling OR charity endorsement)","Single operative provision (section 4) with no subsections or conditional logic","Minimal cross-referencing — only references to standard tax legislation definitions and the enabling provision (subsection 14-235(5))"],"plain_english_summary":"This change exempts income tax‑exempt organisations from the foreign resident capital gains withholding rule that normally requires buyers to withhold 12.5% of the price on sales of Australian property (generally $750,000+). \n\nIf an entity is ATO‑recognised as income tax‑exempt (eg, by private binding ruling or charity endorsement), the withholding is reduced to nil, preventing sale proceeds from being tied up and cutting unnecessary compliance and cash‑flow burdens."},"flash_summary":{"complexity_score":3,"scope_assessment":{"changed":true,"description":"The instrument varies the default withholding outcome by setting the payable amount to nil for transactions covered by section 14‑200 where the purchaser is provided specified evidence of the seller's income‑tax‑exempt status (sections 3–4). This removes the purchaser's obligation to remit withholding in those cases and places the verification/documentation reliance on the purchaser; the definition of 'income tax exempt entity' is drawn from ITAA 1997 subsection 995‑1(1) (instrument, section 5)."},"complexity_factors":["Narrow eligibility conditions tied to specified documentary evidence (instrument, section 3).","Relies on ATO private binding rulings and charity endorsements as qualifying proof (instrument, section 3).","Cross‑references statutory definitions in the Income Tax Assessment Act 1997 (instrument, section 5).","Delegated administrative variation made under subsection 14‑235(5) of Schedule 1 to the Taxation Administration Act 1953 (instrument header).","Affects existing withholding obligation under section 14‑200 but simply changes the payable amount to nil (instrument, section 4).","Low technical tax calculation complexity but introduces administrative/verification burden on purchasers to obtain and retain evidence (instrument, section 3)."],"plain_english_summary":"**What it does:** This instrument sets the PAYG withholding required for foreign‑resident capital gains (the payments covered by section 14‑200) to nil where the purchaser receives evidence the seller is income tax‑exempt — either a valid ATO private binding ruling for the year or charity endorsement under item 1.1 of section 50‑5 ITAA 1997 (Application; Determination). The Deputy Commissioner made the variation under subsection 14‑235(5). Practically, purchasers stop remitting withholding for qualifying transactions but must obtain and rely on the specified exemption evidence."}},"importantCases":[],"_links":{"self":"/api/acts/payg-withholding-variation-for-foreign-resident-capital-gains-withholding-payments-income-tax-exempt","history":"/api/acts/payg-withholding-variation-for-foreign-resident-capital-gains-withholding-payments-income-tax-exempt/history","analysis":"/api/acts/payg-withholding-variation-for-foreign-resident-capital-gains-withholding-payments-income-tax-exempt/analysis","conflicts":"/api/acts/payg-withholding-variation-for-foreign-resident-capital-gains-withholding-payments-income-tax-exempt/conflicts","importantCases":"/api/acts/payg-withholding-variation-for-foreign-resident-capital-gains-withholding-payments-income-tax-exempt/important-cases","documents":"/api/acts/payg-withholding-variation-for-foreign-resident-capital-gains-withholding-payments-income-tax-exempt/documents"}}