{"id":"F2025L00607","name":"Taxation Administration (Withholding Variation for Certain Payments Made by External Administrators and Trustees of Bankrupts’ Estates) Legislative Instrument 2025","slug":"taxation-administration-withholding-variation-for-certain-payments-made-by-external-administrators-a","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":442838,"registerId":"F2025L00607-fast-fetch-1775957774540","compilationNumber":null,"startDate":"2026-04-12","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Taxation Administration (Withholding Variation for Certain Payments Made by External Administrators and Trustees of Bankrupts’ Estates) Legislative Instrument 2025","content":"---\nmeta-content-style-type: text/css\nmeta-content-type: application/xhtml+xml; charset=utf-8\n---\n\n?xml version=\"1.0\" encoding=\"utf-8\" standalone=\"no\"?>\n\n![Commonwealth Coat of Arms of Australia](image.001.jpeg)\n\n \n\nTaxation Administration (Withholding Variation for Certain Payments Made by External Administrators and Trustees of Bankrupts’ Estates) Legislative Instrument 2025\n\nI, Ben Kelly, Deputy Commissioner of Taxation, make the following legislative instrument.\n\nDated\n\nBen Kelly\n\nDeputy Commissioner of Taxation\n\n \n\n \n\nContents\n\n1  Name\n\n2  Commencement\n\n3  Authority\n\n4  Definitions\n\n5  Schedules\n\n6  Withholding Variation\n\nSchedule 1—Repeals\n\nPAYG Withholding Variation: Variation of amount to be withheld from certain payments made by external administrators and trustees of bankrupt estates\n\n \n\n \n\n1  Name\n\n  This instrument is the Taxation Administration (Withholding Variation for Certain Payments Made by External Administrators and Trustees of Bankrupts’ Estates) Legislative Instrument 2025.\n\n2  Commencement\n\n (1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.\n\n \n\n- Commencement information\n- Column 1 Column 2 Column 3\n- Provisions Commencement Date/Details\n- 1. The whole of this instrument 1 July 2025.\n\n\nNote: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.\n\n (2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.\n\n3  Authority\n\n  This instrument is made under section 15-15 in Schedule 1 to the Act.\n\n4  Definitions\n\nNote: A number of expressions used in this instrument have the same meaning as in Schedule 1 to the Act. Expressions in Schedule 1 to the Act have the same meaning as in the Income Tax Assessment Act 1997 (see section 3AA of the Act). The following expressions are relevantly defined in section 995-1 of the Income Tax Assessment Act 1997:\n\n(a) genuine redundancy payment;\n\n(b) unused annual leave payment;\n\n(c) unused long service leave payment;\n\n(d) withholding payment.\n\n  In this instrument:\n\nAct means the Taxation Administration Act 1953.\n\nbankrupt has the meaning given by section 5 of the Bankruptcy Act 1966.\n\nexternal administrator has the meaning given by section 5-20 of Schedule 2 to the Corporations Act 2001, and it also includes a receiver, and a receiver and manager as defined in that Act.\n\npayment in lieu of notice has the meaning given by Subdivision A of Division 11 of the Fair Work Act 2009.\n\n5  Schedules\n\n  Each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.\n\n6  Withholding Variation\n\n (1) The amount that an external administrator or a trustee of the estate of a bankrupt must withhold from a withholding payment made under sections 12-35, 12-85 and 12-90 of Schedule 1 to the Act is varied to 32 per cent of that payment, where:\n\n (a) the payment accrued before the day on which the external administrator or trustee was appointed; and\n\n (b) the payment was:\n\n (i) back payment of wages, including for unpaid amounts of leave already taken, or for underpayment of wages over any period;\n\n (ii) an unused annual leave payment;\n\n (iii) an unused long service leave payment;\n\n (iv) a payment in lieu of notice; or\n\n (v) a genuine redundancy payment.\n\n (2) An external administrator or a trustee of the estate of a bankrupt is not required to withhold from any amounts that fall within the tax-free component of a genuine redundancy payment.\n\n\n\n\nSchedule 1—Repeals\n\nPAYG Withholding Variation: Variation of amount to be withheld from certain payments made by external administrators and trustees of bankrupt estates\n\n1  The whole of the instrument\n\nRepeal the instrument\n","sortOrder":0}],"analysis":{"flash_summary":{"complexity_score":2,"scope_assessment":{"changed":true,"description":"The instrument repeals the earlier PAYG withholding variation instrument (Schedule 1) and prescribes a 32% withholding rate for specified pre-appointment payments made by external administrators and bankrupts' trustees, effective 1 July 2025. Because the prior instrument is wholly repealed and replaced by this text, the instrument changes the operative withholding regime; the exact differences from the repealed instrument cannot be determined from this instrument alone."},"complexity_factors":["Narrow subject matter: applies only to withholding by external administrators and trustees of bankrupt estates.","Direct rate change: fixes a single withholding rate (32%) for specified payment types, simplifying calculation but changing cashflow for payees.","Cross-references: relies on multiple external definitions and provisions (Taxation Administration Act Schedule 1 sections 12-35/12-85/12-90; Income Tax Assessment Act definitions; Bankruptcy Act and Corporations Act definitions) which implementers must check.","Temporal determination: applies only where the payment accrued before appointment, requiring factual assessment of accrual timing.","Tax-free component carve-out: exempts the tax-free component of genuine redundancy payments, requiring trustees to determine and document that component before withholding.","Compliance burden: shifts withholding/remittance tasks and recordkeeping to administrators/trustees and may affect cashflow for recipients.","Transitional effect: the instrument expressly repeals the prior withholding-variation instrument, so administrators must follow the new rule as of commencement (1 July 2025)."],"plain_english_summary":"This instrument sets a flat 32% PAYG withholding rate for certain payments made by external administrators and trustees of bankrupt estates where the payment accrued before their appointment — covering back pay (including unpaid leave), unused annual and long service leave, payment in lieu of notice, and genuine redundancy (but not the tax‑free redundancy component). It takes effect 1 July 2025 and makes administrators/trustees responsible for withholding at that rate when those conditions are met."},"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":3,"scope_assessment":{"changed":false,"description":"The instrument maintains its original narrow scope. It addresses a specific technical issue—standardising withholding rates for pre-appointment employee entitlements in insolvency contexts—without expanding into broader tax administration matters. The repeal and replacement of a previous instrument on the same topic suggests continuity of purpose rather than scope creep."},"complexity_factors":["Short instrument with only 6 substantive sections plus a repeal schedule","Minimal defined terms (only 4 explicit definitions in section 4, plus incorporated definitions from other Acts)","Single operative provision (section 6) with straightforward conditional structure","No nested exceptions—only one clear carve-out for tax-free components of redundancy payments","Heavy reliance on external statutory definitions (incorporates definitions from Taxation Administration Act 1953, Income Tax Assessment Act 1997, Bankruptcy Act 1966, Corporations Act 2001, and Fair Work Act 2009)","Simple binary commencement (single date, no staggered or conditional commencement)"],"plain_english_summary":"This law requires external administrators and trustees of bankrupt estates to withhold tax at a flat 32% from certain employment entitlements that accrued before their appointment (for example, unpaid wages, leave payouts, and redundancy-type payments). \n\nIt exempts withholding on the tax-free component of genuine redundancy payments. The change simplifies PAYG treatment of insolvency-era entitlements and secures tax revenue for the ATO."}},"importantCases":[],"_links":{"self":"/api/acts/taxation-administration-withholding-variation-for-certain-payments-made-by-external-administrators-a","history":"/api/acts/taxation-administration-withholding-variation-for-certain-payments-made-by-external-administrators-a/history","analysis":"/api/acts/taxation-administration-withholding-variation-for-certain-payments-made-by-external-administrators-a/analysis","conflicts":"/api/acts/taxation-administration-withholding-variation-for-certain-payments-made-by-external-administrators-a/conflicts","importantCases":"/api/acts/taxation-administration-withholding-variation-for-certain-payments-made-by-external-administrators-a/important-cases","documents":"/api/acts/taxation-administration-withholding-variation-for-certain-payments-made-by-external-administrators-a/documents"}}