Debits tax was abolished from 1 July 2005

It was a tax on debit transactions to accounts with cheque drawing facilities.

Debit transactions

Debit transactions include:

  • Direct debits,
  • Over-the-counter withdrawals,
  • Cheque
  • EFTPOS, and
  • Automatic teller machine withdrawals

Who paid debits tax?

  • Financial institutions and account holders are jointly liable for debits tax
  • The financial institution is entitled to pass debits tax on to the account holder

Debits tax is payable on the value of the debit to the account.

Exemptions

The following debits were exempt:

  • To reverse a previous incorrect credit entry, and
  • To deduct financial institutions duty or debits tax

Exempt organisations

  • Charitable institutions, including public benevolent and religious institutions,
  • Support organisations for charitable institutions,
  • Public hospitals,
  • Government schools, and
  • Commonwealth or state government departments or authorities, or local government bodies, provided that the body does not carry on activities in the nature of a business

Claim an exemption

To claim an exemption from debits tax, you will need to complete an application form (contact us for information).

  • If you are entitled to an exemption, we will issue a certificate of exemption,
  • Once obtained you should provide this certificate of exemption to your financial institution

The Taxation Administration Act 1997 (TAA) covers the collection and administration of payroll tax, duties (formerly called stamp duty) and debits tax.