Withholding from payments made to foreign residents
Under the pay as you go (PAYG) withholding system, tax is collected throughout the year as income is earned. Payers must withhold amounts from payments made to foreign resident payees (individual and non-individual entities). This includes payments for:
- entertainment or sports activities
- construction and related activities
- casino gaming junket activities
If you are a foreign resident and you receive payments for the activities listed above, you will have an amount withheld from these payments. You may also receive payments from an agent who acts on your behalf. If the agent is an Australian entity they will be required to withhold as though the payment was made directly to you.
Generally withholding is not required from payments made to foreign resident support staff involved in entertainment activities if they are from a country Australia has a tax treaty with.
Exemption from foreign resident withholding
In some circumstances, we may grant an exemption from foreign resident withholding (FRW) obligations if the foreign resident:
- has an established history of compliance with Australian tax laws
- is likely to continue to comply with those obligations in the future.
We will consider whether the foreign resident is, or was, liable to pay an instalment under the PAYG instalment system in the previous two years. In particular, whether they have any outstanding tax-related liabilities and the extent to which they and their associates have complied with their obligations under Australian tax laws in the last two years. PAYG instalments allow you to pay instalments during the income year towards your expected tax liability on your business and investment income. We will write to tell you if you have to pay PAYG instalments.
All requests for an exemption must be submitted in writing stating the reasons why you should be granted an exemption.
Send the requests for exemption to:
Foreign resident withholding – exemptions
Australian Taxation Office
GPO Box 9977
Sydney NSW 2001
AUSTRALIA