{"id":"F2025L01094","name":"Taxation Administration (Withholding Variation for Payment of Certain Allowances) Legislative Instrument 2025","slug":"taxation-administration-withholding-variation-for-payment-of-certain-allowances-legislative-instrume","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":442957,"registerId":"F2025L01094-fast-fetch-1775957870814","compilationNumber":null,"startDate":"2026-04-12","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Taxation Administration (Withholding Variation for Payment of Certain Allowances) Legislative Instrument 2025","content":"---\nmeta-content-style-type: text/css\nmeta-content-type: application/xhtml+xml; charset=utf-8\n---\n\n![Commonwealth Coat of Arms](image.001.jpeg)\n\n \n\nTaxation Administration (Withholding Variation for Payment of Certain Allowances) Legislative Instrument 2025\n\nI, Ben Kelly, Deputy Commissioner of Taxation, make the following legislative instrument.\n\nDated 2 September 2025\n\nBen Kelly\n\nDeputy Commissioner of Taxation\n\n \n\n \n\n \n\nContents\n\n1  Name\n\n2  Commencement\n\n3  Authority\n\n4  Definitions\n\n5  Schedules\n\n6  Withholding amount varied to nil\n\n7  Specified allowances\n\nSchedule 1—Repeals\n\nTaxation Administration Act 1953 - Pay as you go withholding -PAYG Withholding Variation: Allowances – Legislative Instrument\n\n \n\n \n\n1  Name\n\n  This instrument is the Taxation Administration (Withholding Variation for Payment of Certain Allowances) 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 The day after this instrument is registered.\n\n\nNote: This table relates only to the provisions of this instrument as originally made.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 ITAA 1997 (see section 3AA of the Act). The following expressions are relevantly defined in section 995-1 of the ITAA 1997:\n\n1.      award transport payment;\n2.      business kilometres\n\n\n(c) car expense;\n\n(d) income tax law;\n\n(e) laundry expense;\n\n(f) meal allowance expense;\n\n(g) travel allowance expense;\n\n(h) work expense.\n\n  In this instrument:\n\nAct means the Taxation Administration Act 1953.\n\nITAA 1997 means the Income Tax Assessment Act 1997.\n\nspecified allowance means an allowance that is specified at section 7.\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 amount varied to nil\n\n (1) The amount that a payer must withhold from a withholding payment to a payee under sections 12-35, 12-40 and 12-45 of Schedule 1 to the Act is varied to nil where:\n\n (a) the payment relates to a specified allowance;\n\n (b) the payer reasonably expects that the payee will incur deductible work expenses related to the specified allowance that in total are at least equal to the amount of the specified allowance; and\n\n (c) the amount and nature of the payment is shown separately in the accounting records of the payer.\n\nNote: Normal withholding rates apply to the part of a payment related to a specified allowance that exceeds a limit specified in section 7 for that allowance. The normal withholding rates that apply for the financial year relevant to the payment are provided in a legislative instrument made under section 15-25 in Schedule 1 to the Act for that financial year.\n\n7  Specified allowances\n\n  The following allowances are specified for the purposes of section 6:\n\n (a) an allowance for car expenses based on a set rate per kilometre travelled by a car, where:\n\n (i) the allowance is calculated by multiplying the set rate per kilometre by the total number of business kilometres travelled by the car;\n\n (ii) the set rate used in the calculation does not exceed the rate determined for the income year under subsection 28-25(4) of the ITAA 1997; and\n\n (iii) the total number of business kilometres used in the calculation in respect of which the allowance is paid during the financial year does not exceed the number of business kilometres provided for in subsection 28-25(2) of the ITAA 1997;\n\n (b) an allowance for laundry expenses where the total amount paid during the financial year for such an allowance does not exceed the amount that can be deducted without substantiation under section 900-40 of the ITAA 1997;\n\n (c) an allowance for domestic travel allowance expenses which does not exceed the amount that the Commissioner considers reasonable for the income year for the purposes of section 900‑50 of the ITAA 1997;\n\n (d) an allowance for overseas travel allowance expenses which does not exceed the amount that the Commissioner considers reasonable for the income year for the purposes of section 900-55 of the ITAA 1997;\n\n (e) an allowance for overtime meal allowance expenses covered by section 900-60 of the ITAA 1997 which does not exceed the amount that Commissioner considers reasonable for the income year for the purposes of section 900-60 of the ITAA 1997; and\n\n (f) an award transport payment.\n\n\n\n\nSchedule 1—Repeals\n\nTaxation Administration Act 1953 - Pay as you go withholding - PAYG Withholding Variation: Allowances – Legislative Instrument\n\n1  The whole of the instrument\n\nRepeal the instrument\n","sortOrder":0}],"analysis":{"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"},"kimi_summary":{"content_quality":"ok","complexity_score":4,"scope_assessment":{"changed":false,"description":"This instrument appears to maintain the same scope as its predecessor. It replaces the repealed \"PAYG Withholding Variation: Allowances – Legislative Instrument\" with substantively similar provisions covering the same categories of allowances (car, laundry, travel, meal, and award transport payments). The structure and coverage remain consistent with the original intent of providing withholding relief for genuine work-related expense reimbursements."},"complexity_factors":["Multiple cross-references to external legislation (ITAA 1997, Taxation Administration Act 1953) requiring readers to look up definitions and rate calculations elsewhere","Nested conditions in section 7 with multiple sub-paragraphs (e.g., car expense allowance has three separate qualifying conditions at (i), (ii), and (iii))","Reliance on Commissioner-determined \"reasonable amounts\" that change annually and are not specified in the instrument itself","Defined terms that redirect to other legislation (8 expressions defined via ITAA 1997 section 995-1)","Conditional logic requiring simultaneous satisfaction of three separate tests in section 6(1)(a)-(c)"],"plain_english_summary":"This instrument sets withholding to nil for certain work‑related allowances (car, laundry, travel, overtime meals, and some award transport payments) when employers reasonably expect employees will spend the full amounts on deductible work expenses and the allowance is separately recorded. It affects employers paying—and employees receiving—these reimbursements, simplifying cash flow and reducing withholding paperwork. It also repeals the prior allowances variation instrument."},"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":true,"description":"This instrument repeals the prior PAYG withholding variation instrument (Schedule 1) and replaces it with a re‑specified set of qualifying allowances and new tests: a payer's reasonable expectation about a payee's deductible work expenses and a requirement for separate accounting records. It also ties allowance caps to ITAA 1997 limits or amounts the Commissioner considers reasonable (see s6 and s7), thereby changing the operational scope and the compliance steps payers must follow."},"complexity_factors":["Cross-references to multiple ITAA 1997 provisions for numerical caps and substantiation rules (see s7 and definitions referencing ITAA 1997)","Subjective 'reasonable expectation' test placed on payers to predict payees' deductible expenses (s6(b))","Commissioner discretion to determine 'reasonable' allowance amounts for some categories (s7(c)–(e))","Per‑financial‑year limits and kilometre caps that require aggregate tracking across payments (s7(a)(iii), s7(b))","Recordkeeping requirement that the allowance amount and nature be shown separately in payer accounting records (s6(c))","Interaction with normal withholding rates for amounts above specified limits and dependence on a separate legislative instrument for applicable rates (note to s6)","Repeal of an earlier PAYG withholding variation instrument (Schedule 1) means transitional or scope changes must be managed by administrators and payers"],"plain_english_summary":"This instrument makes pay-as-you-go withholding zero for certain employer allowances where the payer reasonably expects the payee’s deductible work expenses will be at least equal to the allowance and the allowance is recorded separately in the payer’s accounts. It lists qualifying allowances (car kilometre payments, laundry, domestic and overseas travel, overtime meal and award transport) and ties caps to limits in the Income Tax Assessment Act 1997 or amounts the Commissioner considers reasonable; normal withholding applies to any excess."}},"importantCases":[],"_links":{"self":"/api/acts/taxation-administration-withholding-variation-for-payment-of-certain-allowances-legislative-instrume","history":"/api/acts/taxation-administration-withholding-variation-for-payment-of-certain-allowances-legislative-instrume/history","analysis":"/api/acts/taxation-administration-withholding-variation-for-payment-of-certain-allowances-legislative-instrume/analysis","conflicts":"/api/acts/taxation-administration-withholding-variation-for-payment-of-certain-allowances-legislative-instrume/conflicts","importantCases":"/api/acts/taxation-administration-withholding-variation-for-payment-of-certain-allowances-legislative-instrume/important-cases","documents":"/api/acts/taxation-administration-withholding-variation-for-payment-of-certain-allowances-legislative-instrume/documents"}}