Commentary

A1.114 Deduction of income tax at source

Administration and compliance

A1.114 Deduction of income tax at source

A1.114 Deduction of income tax at source

Income tax is sometimes deducted at source before the income reaches its final destination, although this practice has not been in use as much following the introduction of self-assessment. The major area in which it is still used is the deduction of income tax under Pay As You Earn (PAYE) from payments to employees1. Deduction of tax at source speeds the receipt of tax, reduces the cost of collection (subject to the cost of making repayments) and ensures that the tax is not lost.

The provisions governing the deduction of income tax at source are found in ITA 2007, Pt 152, and provide the circumstances under which sums representing income tax should be deducted from:

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