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Foreign resident entertainment, sports, construction and casino gaming activities

PAYG withholding on payments to foreign residents for entertainment, sport, building or casino gaming junket activities.

Last updated 5 February 2018

PAYG withholding arrangements for payments made to foreign residents for entertainment, sports, construction or casino gaming junket activities.

You need to withhold amounts when making payments to foreign residents for entertainment, sports, construction or casino gaming junket activities.

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Entertainment or sports activities

You may need to withhold amounts from payments for entertainment or sports activities.

Payments and fees

Payments and fees include:

  • appearance payments
  • player of the series awards
  • bonuses
  • endorsement fees
  • expense reimbursements
  • match payments
  • preparation fees
  • sponsorship payments
  • performance fees
  • fees for public speaking or providing sports commentary
  • non-cash benefits, including the dollar value of significant prizes received such as a motor vehicle or holiday.

Entertainment activities

Entertainment activities include those of a performing artist using intellectual, artistic, musical, physical or other personal skills, by performing or presenting to an audience. These include:

  • acting
  • giving a musical performance
  • performing in a play, film, tape, disc, television or radio broadcast
  • daily allowances or payments intended to cover costs of living while in Australia
  • dancing
  • speaking publicly
  • taking part in a display
  • undertaking a promotional or similar type of activity.

Film industry

If film industry activities are undertaken in Australia, foreign resident withholding is required from payments to:

  • a foreign agent of an actor
  • individual members of the cast or crew.

Actors usually have a tax liability, regardless of the period of employment in Australia.

Foreign resident withholding also applies to payments made by foreign entities to people carrying out film industry work in Australia – for example, when a foreign company pays people associated with filming in Australia. The foreign entity has all of the obligations of a payer.

Withholding for foreign resident performers at festivals

Foreign acts often perform at Australian arts festivals or similar events. Many of these foreign performers are paid fees that are equal to or less than their total costs associated with the performance.

Generally, withholding is required from amounts paid to foreign resident performers for providing entertainment in Australia. To help festival organisers in managing visits by foreign performers, we will vary some of the withholding obligations that would generally apply.

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Varying the withholding rate

A variation of the withholding rate to nil will be granted where we are satisfied a performer or act will have either no, or little tax to pay in Australia.

If a fee paid to a foreign resident company to perform at a festival in Australia is $10,000 or less per touring party member (including support staff), a variation to nil will usually be granted. When applying for a variation on this basis you should provide details of the nature of the costs to be paid by the performers. There is no need to provide a detailed budget for the visit.

In some instances, variations are granted where the foreign performer's fees exceed $10,000.

Each case is considered on its merits. Where fees exceed $10,000 per touring party member (including support staff), you, the payee or their agent will be required to provide a detailed budget for the individual act.

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Australian business number for foreign resident performers

Where a withholding variation to nil is granted, there is no requirement to apply for an Australian business number (ABN). The variation notice we issue will remove the requirement to withhold where the payee does not quote an ABN.

Sports activities

Sports activities may include:

  • athletics
  • team sports
  • individual sports
  • other activities (including motor or horse racing).

A member of a sporting team is considered to be an employee of that team. If you (as the body which controls the team) make payments to a team member for participation in sporting events in Australia, you need to apply foreign resident withholding at the rates which apply to employees.

If you make payments to foreign residents who are not employees, and other entities for taking part in sports activities in Australia, you may also need to withhold tax from their payment. This may include payments to:

  • individual players (including individuals providing services through their own corporate identity)
  • sporting teams
  • foreign sporting boards
  • support staff (including coaches, trainers and sports psychologists).

Foreign resident withholding does not apply to activities undertaken as a recreational pursuit or hobby.

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Sporting and entertainment groups

Payments for entertainment or sports activities subject to foreign resident withholding also apply to sporting and entertainment groups including sporting teams, theatre companies, orchestras and touring bands. Amounts may also have to be withheld from payments to individual foreign residents who provide their services through their own businesses.

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Support staff and crew

You must withhold amounts from payments made to the foreign resident support staff and crew of foreign residents involved in sporting or entertainment activities unless they:

  • are residents, for tax purposes, of a country with which Australia has an international tax agreement
  • reside in Australia for no more than 183 days (6 months) in the financial year.

Entertainment support staff can include:

  • directors
  • producers
  • photographers
  • designers
  • editors
  • hairdressers
  • choreographers
  • bodyguards.

Sports support staff can include:

  • coaches
  • doctors
  • personal trainers
  • physiotherapists
  • sports psychologists.

United States payees

You don’t need to withhold from payments made to an entertainer or sportsperson who is a resident of the United States if his or her gross income from working in Australia is less than $10,000 US in a financial year.

Construction and related activities

Construction works include the construction, installation and upgrading of buildings, plant and fixtures, and may include:

  • dams
  • mine site development
  • natural resource infrastructure
  • pipeline works
  • railway or road works
  • residential building
  • resort development.

Related activities such as commissioning of infrastructure, training and support of personnel to operate infrastructure and supervision during the initial phase of operation are also included. For example:

  • administration
  • assembly
  • design
  • commissioning and operation of facilities
  • engineering
  • costing
  • fabrication
  • installation
  • supervision and provision of personnel
  • supply of plant and equipment.

Casino gaming junket activities

Businesses that arrange for foreign gamblers to come to Australia for the purpose of gaming at casinos are known as casino gaming junket tour operators (JTO). You may make payments to them in the form of:

  • monetary payments
  • incentives (flights, accommodation, food and beverage)
  • non-cash benefits as a reward for bringing people to a casino to gamble.

Services provided by JTOs include:

  • contracting with casinos and players
  • recording player gambling statistics
  • local funds management
  • casino settlement and liaison
  • repatriation of funds
  • credit and debt management
  • providing customer liaison services (including translating or interpreting).

Making payments to an agent

If you have to make payments to an agent on behalf of a foreign resident, you should withhold from payments as though the payment were made directly to the foreign resident – regardless of whether the agent is a resident in Australia.

If an agent receives a payment subject to foreign resident withholding on behalf of an overseas resident and an amount has not already been withheld from that payment by the payer, the agent must then withhold from the payment.

How much to withhold

The amount you withhold depends on:

Withholding from entertainment or sports activities

If the payee is:

  • a foreign resident company (ABN supplied), you should withhold at the company tax rate
  • an individual foreign resident, you should withhold at the individual foreign resident income tax rate.

Film industry

Where the payment is to an individual foreign resident, you withhold at an average tax rate calculated on the total payment amount for the financial year.

Start of example

Example

Christian is an individual foreign resident actor. As outlined in his contract, he will receive five payments over the Australian income year, ending 30 June 2017, from his home country film company. These payments are for his personal performances while filming in Australia. The amounts are:

  • $25,000
  • $30,000
  • $50,000
  • $40,000
  • $25,000.

The company adds the payments together to give the total amount that will be paid in that income year. It then applies the rates for non-resident individuals to determine the tax payable for the financial year:

Step 1 – Total payments for the financial year

$25,000 + $30,000 + $50,000 + $40,000 + 25,000 = $170,000

Step 2 – Amount to be withheld from $170,000 = $28,275 + ($83,000 x 0.37)

= $28,275 + $30,710 = $58,985

Step 3 – Average tax rate

To calculate the average tax rate, the company will need to divide the answer at Step 2 by the answer at Step 1, and multiply by 100:

($58,985 ÷ $170,000) × 100 = 34.7%

So, the rate the company would withhold on each of the five payments by the film company is the average rate of 34.7%.

  • $25,000 × 0.347 = $8,675
  • $30,000 × 0.347 = $10,410
  • $50,000 × 0.347 = $17,350
  • $40,000 × 0.347 = $13,880
  • $25,000 × 0.347 = $8,675

Total amount withheld is $58,990

End of example

Withholding from construction and related activities

For foreign residents you should withhold 5% of the total payment.

Withholding from casino gaming junket activities

For foreign resident businesses or individuals you should withhold 3% of the total payment.

The JTO is often entitled to have an Australian business number (ABN). If they are entitled to one but don't provide it, a Statement by supplier should not be used in its place.

Withholding when no ABN is supplied

If you have to withhold tax from a foreign resident involved in any of these activities, and they don't supply you with an ABN, you will need to withhold from payments at the top tax rate.

The withholding requirements where an ABN is not quoted takes precedence over the foreign resident withholding requirements. If you have withheld because an ABN was not quoted, you do not also withhold under foreign resident withholding rules.

Withholding from when a variation is requested

The withholding amount could be different if the payee requests a variation.

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QC17608