This information will assist you if you pay foreign residents for arranging casino gaming junket activities. You must withhold tax from these payments under the existing pay as you go (PAYG) withholding rules.
If you are making interest, dividend or royalty payments to foreign residents, different withholding rules apply and this information is not for you.
See also:
- PAYG withholding
- Register for PAYG withholding
- Paying and reporting withheld amounts
- Issue payment summaries and lodge annual reports
- How to pay
- Record keeping for small business
When should I withhold tax?
Business that arrange for foreign gamblers to come to Australia for the purpose of gaming at casinos are generally known as casino gaming junket tour operators (JTO). You may make payments to them in the form of:
- monetary payments, including a commission based on the gaming or losses of the people
- incentives including:
- flights
- accommodation
- food and beverage
- laundry, car hire or any other in-house services
- non-cash benefits as a reward for bringing people to a casino to gamble.
Services provided by JTOs include, but are not limited to:
- contracting with casinos
- contracting with players
- recording player gambling statistics
- credit and debt management
- local funds management
- casino settlement and liaison
- repatriation of funds
- providing customer liaison services (for example, translating and interpreting)
- associated services such as arranging hotel accommodation, transportation and entertainment.
In some circumstances, you may have to make payments to an agent on behalf of a foreign resident. You should withhold from payments you make to such an agent as though you were paying the foreign resident directly. This is the case even if the agent is an Australian resident.
What are my obligations?
As a payer, you are required to withhold tax from payments to:
- payees
- workers who are not employees that have provided an ABN
- suppliers carrying on an enterprise in Australia who do not quote an ABN.
Find out about:
- How much to withhold from payments
- Withholding when a payee does not quote an ABN
- Was the payment made in a foreign currency?
- PAYG withholding variation
- What do I do when I receive a variation notice for a payee?
- What do I do when I receive a variation withdrawal notice?
- Payment summaries and reporting
How much to withhold from payments
You are required to withhold 3% of the total payment you make to a foreign resident business or individual for arranging casino gaming junket activities.
You are required to determine if the JTO will be considered to be carrying on an enterprise in Australia to ascertain if an ABN should be provided. Often, they are entitled to one.
When a JTO is entitled to an ABN and does not provide one, a ‘Statement by supplier’ should not be used in its place.
Withholding when a payee does not quote an ABN
If a foreign resident JTO payee is required to supply you with an ABN and they do not, you must withhold at the highest tax rate (47% from 1 July 2017).
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.
If you make payments to foreign resident JTOs who quote an ABN (or who are not required to quote an ABN), you must withhold at one of the following rates:
- the varied rate specified on their PAYG variation notice
- 3% from the payment you make if they do not have a PAYG variation.
What if the payment is made in a foreign currency?
You must report and pay amounts in Australian dollars.
If you have to make a payment in a foreign currency, you need to calculate the equivalent Australian dollar value of the payment at the time you make the payment.
After converting the foreign currency payment to Australian dollars, you then calculate the amount to withhold at the required rate.
See also:
PAYG withholding variation
A foreign resident JTO payee may seek a variation where the required rate of withholding is lower or higher than the expected tax payable on their Australian taxable income. If a payee claims the prescribed rate is too low or too high, tell them to apply for a variation.
A payee will need to apply for a variation if they believe they are not required to pay tax in Australia for either of the following reasons:
- there is a tax treaty in place
- where the income is exempt under Australian law.
Tax treaties are special agreements that Australia has entered into with over 40 countries. The tax treaties help prevent the same income being taxed more than once.
See also:
Next steps:
What do I do when I receive a variation notice for a payee?
Where a payee has been granted a variation, we will send you a written variation notice confirming the new rate. Until you receive this notice, you must not vary the rate of withholding.
When you receive a variation notice for the payee:
- match the payee identity details on the notice with the payee identity details you have in your records
- you must use the varied rate to calculate how much to withhold from any future payments you make to the payee that are covered by the variation – continue to do so until the expiry date shown on the notice or until we advise you otherwise
- keep a copy of the variation notice with your business records for five years.
What do I do if I receive a variation withdrawal notice?
If you receive a variation withdrawal notice for a payee from us:
- match the payee identity details on the notice with the payee identity details you have in your records
- you must withhold 3% from the payment.
- keep a copy of the variation withdrawal notice with your business records for five years.
See also:
Need more help? FRWvariation@ato.gov.au or call our hotline number 1300 306 105
Payment summaries and reporting
If you withhold from payments to a foreign resident, you have specific end-of year reporting obligations and you must do both of the following:
- provide each foreign resident with a foreign residents payment summary
- send us a PAYG withholding annual report
You may also need to report details of all amounts you withheld because an ABN was not quoted. You can lodge this report by completing a withholding where ABN not quoted – annual report.
You must lodge these reports by 31 October following the end of the financial year. You are not required to send copies of the payment summaries given to your payee, but you must keep copies for your records.
Next steps:
- PAYG withholding annual report - payments to foreign residents
- Withholding where ABN not quoted – annual report
- Lodging your PAYG withholding annual reports online