11.6.5 Payment of Tax Withholdings to Commissioner of Taxation
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This section concerns the deduction of tax withholdings from taxable pensions, and the payment of this money direct to the Commissioner of Taxation.
Payment of Tax Withholdings at Pensioner's Request
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Pensioner may have tax withheld from pension
VEA → [3]
A pensioner can ask for tax withholdings to be made and paid directly to the Commissioner of Taxation. This method is often used as a budget measure to avoid an end of financial year tax bill.
Which pensions can have tax withheld?
The following payments can have tax withheld from them for payment to the Australian Tax Office:
- disability compensation payment [4], war widow's/widower's pension [4],
- orphan's pension [4],
- service pension [4], veteran payment and income support supplement [4] (ISS),
- clothing allowance, attendant allowance, decoration allowance, recreation transport allowance,
- allowances paid under the Veterans' Children Education Scheme [5](VCES) [5], and
- Defence Force Income Support Allowance [4] (DFISA) and DFISA-like which ceased 1 January 2022.More → [6]
Pensioner must make request for withholdings in writing
VEA → [7]
In order to have tax directly withheld from pension payments, a pensioner must request in writing that a specific fortnightly amount is to be withheld.
Veterans' Entitlements (Direct Deductions Arrangements) Instrument 2005
http://www.comlaw.gov.au/comlaw/management.nsf/lookupindexpagesbyid/IP200509323?OpenDocument [10]
Disability compensation payment (known before 2022 as disability pension), for the purposes of service pension, income support supplement and veteran payment, means:
- a pension paid by way of compenstion for incapacity from war caused conditions, or peacetime, peacekeeping or hazardous service caused conditions (other than a war widow's or orphan's pension); or
- temporary incapacity allowance; or
- any other payment in respect of incapacity or death resulting from war or war-like operations in which the Crown has been engaged (usually paid by another Commonwealth country).
Please note that the Disability Compensation Payment is legally a pension by way of compensation under the VEA so that concessional benefits under state, territory and local government legislation to pensioners/pensions under the VEA are not denied.
A form of pension that is paid to the partner of a veteran where the veteran has died as a result of war service or eligible Defence Service [4]. War widow's/widower's pension is also paid to the partner of a veteran whose death was not war caused if the veteran was a ex-prisoner of war or if the veteran was receiving Extreme Disablement Adjustment (EDA) Rate [4], Special Rate (T&PI) [4] or a rate increased in respect of certain war-caused injury or disease.
A form of pension that is paid to a child of a veteran where the veteran has died as a result of war service [4] or defence service [4]. The child may be the natural or adopted child of the veteran or any other child who was wholly or substantially dependent [4] on the veteran.
A service pension is an income support payment broadly equivalent to the social security age and disability support pensions. It may be paid once a veteran or partner has reached the nominated age or is incapacitated for work.
ISS is an income support payment that may be paid to eligible war widows and widowers under the VEA and persons receiving wholly dependent partners' compensation under the MRCA, and who satisfy the means tests. It is an indexed rate, increased twice-yearly in March and September in line with changes to the cost of living and/or average wages. Income Support Supplement (ISS) legislation commenced on 20 March 1995. It is a payment created to replace the ceiling rate income support age, carer, wife and disability support pensions, paid to war widows/widowers by Centrelink.
The information below is for historical reference only.
Defence Force Income Support Allowance (DFISA) ceased on 1 January 2022 because adjusted disability income became exempt income under the Social Security Act 1991. It was an income support payment [4] paid by DVA [4] to people whose income support payment under Social Security Law [4] was reduced, or not payable, because of the impact of adjusted disability pension [4]. DFISA was the difference between the person's existing entitlement, and what the entitlement would have been had adjusted DP been exempt, but was assessed in the calculation of rent assistance.
Payment of Tax Withholdings at the Commissioner of Taxation's Direction
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Last amended: 22 July 2013
Commissioner of Taxation may direct DVA to withhold amounts related to tax liabilities
The Commissioner of Taxation is given the discretion in the Taxation Administration Act 1953 to require DVA to withhold money from instalments of pension to pay an amount owing to the Commissioner of Taxation.
DVA to comply with Commissioner of Taxation's request
VEA ? [14]
The VEA stipulates that Commission [4] must comply with notices issued under Subdivision 260-A in Schedule 1 to the Taxation Administration Act 1953 by:
- withholding money that is due or accruing to the debtor, or which is held for or on account of the debtor, and
- paying the withheld amount to the Commissioner of Taxation.
Reasons why the Commissioner of Taxation can request deductions
The Commissioner of Taxation may request withholdings for the following reasons:
- penalty for unpaid taxes,
- annual assessment of tax payable,
- amendment of a tax assessment, or
- a fine or costs imposed by the Commissioner of Taxation for an offence under the Income Tax Assessment Act or associated legislation.
Amount of taxation withholdings
The amount of withholding is decided by the Commissioner of Taxation. If a pensioner has any queries regarding the amount of withholding, they should be advised to contact the Australian Taxation Office.
According to Section 179 [17]of the VEA [17], the Commission is a body corporate under the name of Repatriation Commission.
Links
[1] https://clik.dva.gov.au/user/login?destination=node/16919%23comment-form
[2] https://clik.dva.gov.au/user/login?destination=node/16971%23comment-form
[3] https://clik.dva.gov.au/book/export/html/16919#tgt-cspol_part11_ftn184
[4] https://clik.dva.gov.au/%23
[5] clikpopup://DEF/Veterans' Children Education Scheme (VCES)
[6] https://clik.dva.gov.au/book/export/html/16919#tgt-cspol_part11_ftn185
[7] https://clik.dva.gov.au/book/export/html/16919#tgt-cspol_part11_ftn186
[8] clik://LEGIS/VEA/section 122B
[9] https://clik.dva.gov.au/book/export/html/16919#ref-cspol_part11_ftn184
[10] http://www.comlaw.gov.au/comlaw/management.nsf/lookupindexpagesbyid/IP200509323?OpenDocument
[11] https://clik.dva.gov.au/book/export/html/16919#ref-cspol_part11_ftn185
[12] https://clik.dva.gov.au/book/export/html/16919#ref-cspol_part11_ftn186
[13] https://clik.dva.gov.au/user/login?destination=node/16969%23comment-form
[14] https://clik.dva.gov.au/book/export/html/16919#tgt-cspol_part11_ftn187
[15] https://clik.dva.gov.au/service-eligibility-assistant-updates/all-determinations-order-date-signed-oldest-most-recent/determinations-under-vea
[16] https://clik.dva.gov.au/book/export/html/16919#ref-cspol_part11_ftn187
[17] http://clik.dva.gov.au/legislation-library