{"id":"F2023L00352","name":"Taxation Administration (Withholding Variation for Personal Services Income) Legislative Instrument 2023","slug":"taxation-administration-withholding-variation-for-personal-services-income-legislative-instrument-20","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":441782,"registerId":"F2023L00352-fast-fetch-1775956995400","compilationNumber":null,"startDate":"2026-04-12","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Taxation Administration (Withholding Variation for Personal Services Income) Legislative Instrument 2023","content":"---\nmeta-content-style-type: text/css\nmeta-content-type: application/xhtml+xml; charset=utf-8\nmeta-generator: Aspose.Words for .NET 22.10.0\n---\n\n?xml version=\"1.0\" encoding=\"utf-8\" standalone=\"no\"?>\n\n![The ATO logo containing the Federal Government crest and the words Australian Taxation Office.](image.001.png)\n\n \n\nTaxation Administration (Withholding Variation for Personal Services Income) Legislative Instrument 2023\n\nI, Ben Kelly, Deputy Commissioner of Taxation, make the following legislative instrument.\n\nDated  15 March 2023\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  Variation of withholding for alienated personal services income\n\nSchedule 1—Repeals\n\nVariation of withholding for personal services income (15/03/2013)\n\n \n\n1  Name\n\n  This instrument is the Taxation Administration (Withholding Variation for Personal Services Income) Legislative Instrument 2023.\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this instrument 1 April 2023. 1 April 2023.\n\n\nNote: This table relates only to the provisions of this instrument as originally made.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 of Schedule 1 to the Act.\n\n4  Definitions\n\nNote 1: A number of expressions used in this instrument have the same meaning as in the Act, including the following:\n\n(a) alienated personal services payment;\n\n(b) amount required to be withheld;\n\n(c) PAYG payment period;\n\n(d) personal services entity;\n\n(e) personal services income;\n\n(f) withholding payment.\n\nNote 2: 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).\n\n  In this instrument:\n\nAct means the Taxation Administration Act 1953.\n\nnet personal services income percentage means the percentage worked out using the following method statement:\n\n  Step 1 – subtract any allowable deductions (excluding salary or wages paid in accordance with subsection 86-15(4) of the Income Tax Assessment Act 1997) for the previous income year from the personal services entity’s gross personal services income (exclusive of GST) for the previous income year;\n\n  Step 2 – divide the result by the personal services entity’s gross personal services income (exclusive of GST) for the previous income year; and\n\n  Step 3 – multiply the result by 100 to give a percentage.\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  Variation of withholding for alienated personal services income\n\n  An amount that a personal services entity must pay to the Commissioner under section 13-5 of Schedule 1 to the Act is varied to nil in cases where:\n\n (a) the personal services entity receives an alienated personal services payment that relates to one or more individuals’ personal services income;\n\n (b) the personal services entity pays salary or wages to the individual or individuals within 14 days after the end of the PAYG payment period in which it receives the alienated personal services payment; and\n\n (c) the salary or wages paid by the personal services entity is equal to or greater than either:\n\n (i) 70 per cent of the gross personal services income (exclusive of GST) received by the personal services entity during the PAYG payment period; or\n\n (ii) the net personal services income percentage applied to the gross personal services income (exclusive of GST) received by the personal services entity during the PAYG payment period.\n\nNote: Under Division 13 of Schedule 1 to the Act, an entity that receives an alienated personal services payment may be obliged to pay an amount to the Commissioner. When an entity is required to pay an amount to the Commissioner under Division 13 (including under section 13-5), the alienated personal services payment can be treated as a ‘withholding payment’. Further, the amount the entity must pay to the Commissioner is an ‘amount required to be withheld’ from a withholding payment (see relevant definitions in subsection 995-1(1) of the Income Tax Assessment Act 1997).\n\n\n\n\nSchedule 1—Repeals\n\nVariation of withholding for personal services income (15/03/2013)\n\n1  The whole of the instrument\n\nRepeal the instrument.\n","sortOrder":0}],"analysis":{"flash_summary":{"complexity_score":5,"scope_assessment":{"changed":true,"description":"This instrument repeals the earlier 15/03/2013 instrument (Schedule 1) and replaces it with a rule that varies to nil the amount a personal services entity would otherwise pay under Division 13 where specified timing and percentage conditions are met (s6). It commences 1 April 2023 (s2)."},"complexity_factors":["Calculation of the ‘net personal services income percentage’ requires prior-year gross PSI and allowable deductions (defined method in s4).","Two alternative compliance thresholds must be tested: a flat 70% of gross PSI or the computed net percentage (s6(c)(i)-(ii)).","Strict timing requirement: salary or wages must be paid within 14 days after the end of the PAYG payment period (s6(b)).","Operative change affects Division 13 withholding obligations and relies on cross-references to Schedule 1 to the Act and Income Tax Assessment Act terms (s6 note; s4 Note 2).","Repeal of the 2013 instrument may raise transitional or interpretive questions for taxpayers and advisers (Schedule 1).","Compliance and record-keeping burden on personal services entities to substantiate wage payments and percentage calculations (implied by s6 and s4).","Technical commencement and authority provisions set fixed start date and rely on delegated legislative power (s2; s3)."],"plain_english_summary":"This instrument lets a personal services entity avoid paying a Division 13 withholding amount to the Commissioner where it receives an alienated personal services payment and then pays salary or wages to the relevant individual(s) within 14 days after the end of the PAYG payment period. The wages must be at least either 70% of gross personal services income or the prior-year net personal services income percentage (see definitions). It starts 1 April 2023 and repeals the 2013 instrument."},"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":4,"scope_assessment":{"changed":false,"description":"This instrument maintains the same scope as its predecessor. It is a straightforward remake of the 2013 instrument with identical policy intent—providing a withholding variation for personal services entities that promptly pay salary or wages to individuals. The repeal and replacement is administrative housekeeping to update the legislative instrument, not an expansion of scope."},"complexity_factors":["Multiple defined terms cross-referencing the Taxation Administration Act 1953 and Income Tax Assessment Act 1997","A three-step mathematical formula ('net personal services income percentage') requiring historical data from the previous income year","Nested conditions in section 6 requiring satisfaction of all three criteria (a), (b), and (c), with criterion (c) offering two alternative thresholds (70% fixed or calculated percentage)","Interaction with Division 13 of Schedule 1 to the Taxation Administration Act 1953, requiring understanding of the broader PAYG withholding framework","Technical terminology throughout ('alienated personal services payment', 'PAYG payment period', 'withholding payment') that assumes familiarity with tax law concepts"],"plain_english_summary":"This instrument lets certain personal services entities reduce their PAYG withholding to nil when they promptly pay the worker most of the income received — either at least 70% of gross receipts or a year‑based computed percentage — and pay wages within 14 days of the payment period. It affects those entities and the individuals they pay, reducing duplicate withholding where tax is collected through PAYG on wages.\n\nIt replaces a 2013 instrument and commences from 1 April 2023."}},"importantCases":[],"_links":{"self":"/api/acts/taxation-administration-withholding-variation-for-personal-services-income-legislative-instrument-20","history":"/api/acts/taxation-administration-withholding-variation-for-personal-services-income-legislative-instrument-20/history","analysis":"/api/acts/taxation-administration-withholding-variation-for-personal-services-income-legislative-instrument-20/analysis","conflicts":"/api/acts/taxation-administration-withholding-variation-for-personal-services-income-legislative-instrument-20/conflicts","importantCases":"/api/acts/taxation-administration-withholding-variation-for-personal-services-income-legislative-instrument-20/important-cases","documents":"/api/acts/taxation-administration-withholding-variation-for-personal-services-income-legislative-instrument-20/documents"}}