Section RD 3 — Income Tax Act 2007: PAYE income payments

RD 3 PAYE income payments Meaning generally (1) The PAYE rules apply to a PAYE income payment which— (a) means— (i) a payment of salary or wages, see section RD 5 ; or (ii) extra pay, see section RD 7 ; or (iii) a schedular payment, see section RD 8 : (b) does not include— (i) an amount attributed under section GB 29 (Attribution rule: calculation): (ii) an amount paid to a shareholder-employee in the circumstances set out in subsection (2): (iii) an amount paid or benefit provided, by a person (the claimant ) who receives a personal service rehabilitation payment from which an amount of tax has been withheld at the rate specified in schedule 4, part I (Rates of tax for schedular payments) or under section RD 18 (Schedular payments without notification), to another person for providing a key aspect of social rehabilitation referred to in paragraph (c) of the definition of personal service rehabilitation payment in section YA 1 (Definitions). When subsections (3) and (4) apply: close companies (2) Subsections (3) and (4) apply for an income year when a person is a shareholder-employee of a close company, and— (a) they do not derive as an employee salary or wages of a regular amount for regular pay periods— (i) of 1 month or less throughout the income year; or (ii) that total 66% or more of the annual gross income of the person in the corresponding tax year as an employee; or (b) an amount is paid as income that may later be allocated to them as an employee for the income year. Income in current tax year (3) The person may choose to treat all amounts paid to them in the income year in their capacity as employee of the close company as income other than from a PAYE income payment. Income in later tax years (4) All amounts paid to the person in later income years in their capacity as employee of the close company are treated as income other than from a PAYE income payment. If questions arise (5) If a question arises whether the PAYE rules apply to all or part of a PAYE income payment, other than an amount referred to in subsections (2) to (4), the Commissioner must determine the matter. Defined in this Act: amount , annual gross income , close company , Commissioner , employee , extra pay , income , income year , pay , pay period , PAYE income payment , PAYE rules , salary or wages , schedular payment , shareholder-employee , tax year , Compare: 2004 No 35 ss NC 1(2) , OB 2 Section RD 3(1)(b)(ii): amended, on 1 July 2008, by section 539 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section RD 3(1)(b)(iii): substituted (with effect on 1 July 2008), on 6 October 2009, by section 503(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section RD 3(1)(b)(iii): added, on 1 July 2008, by section 539 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109). Section RD 3(3): substituted (with effect on 1 April 2008), on 6 October 2009, by section 503(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section RD 3(4): substituted (with effect on 1 April 2008), on 6 October 2009, by section 503(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).