Taxpayers who have paid interest, dividends or royalties subject to withholding tax, to a non-resident, have an obligation to:
- lodge a Pay as you go (PAYG) withholding from interest, dividend and royalty payments to non-residents - annual report by 31 October each year and/or
- lodge an Annual investment income report by 31 October each year, if you're an investment body making interest payments to non-resident investors (or lodge a nil return), and
- pay withholding tax to the ATO, unless a withholding exemption or tax treaty relief applies.
Our focus
If you're in our Medium public and multinational business engagement program and have made overseas payments to non-residents, we may contact you about your PAYG withholding and reporting obligations.
To prepare, you should review your records to ensure you've lodged any overdue annual reports, correctly classified and claimed deductions in your tax return, withheld the correct amount of tax, and paid that amount to us. Engage with us if you've made an error by lodging a voluntary disclosure.
We'll also be focussing on arrangements where:
- entities defer their interest to avoid or defer withholding tax, while continuing to claim income tax deductions on an accrual basis
- offshore related entities are used to facilitate the avoidance of withholding tax in relation to interest expenses deducted against Australian-sourced income and paid to non-residents.
For more information about what we focus on, see Non-resident withholding tax – interest, dividend or royalty.