NON-RESIDENT WITHHOLDING
TAX
Income
Subject to Non-Resident Withholding Tax | Non-Resident
Status | Exemptions
| Joint
Accounts with a Resident | Interest
| Dividends | Time
of Deduction | Remitting
of Accounts Withheld | Penalties.
Income
Subject to Non-Resident Withholding Tax
The following types of income paid to non-residents
are subject to Non-Resident Withholding Tax:
- interest
- amounts in the nature of interest
- profits on the transfer of a qualifying security
(where the sum of the payments to be made, excluding periodic interest,
exceeds the issue price);
- charges under hire purchase and similar financial
arrangements;
- the discount element of payments to offshore
acceptors of bills of exchange and promissory notes; and
- any unfranked component of dividends paid.
Non-Resident
Status
For the purpose of deducting non-resident withholding
tax, a non-resident is:
- an investor who has advised the investment body
of non-resident status or;
- an investor who has authorised payment to be
made to an address outside Australia and its territories; or
- an investor whose address for service of notices/statements
is an overseas address.
Australian residents who temporarily live overseas
and provide an overseas address for income payments and/or statements
(as per 2. and 3. above), are not subject to non-resident withholding
tax. Where the resident advises the investment body of their continued
Australian residency for taxation purposes, non-resident withholding
tax should not be deducted, however, the TFN provisions will apply.
Exemptions
In certain circumstances non-resident investors
may claim an exemption from having non-resident withholding tax deducted.
An investor is required to produce the original exemption advice issued
by the Australian Taxation Office to the investment body.
Joint
Accounts with a Resident and Non-Resident Holders
If the resident/s do not satisfy their TFN/ABN obligations
(ie. to quote a TFN, ABN or claim an exemption), then TFN provisions
apply to the total amount of interest or dividends payable to a joint
account with a non-resident.
If the resident/s do satisfy their obligations,
then non-resident withholding tax must be deducted for the total amount
of interest or dividends paid.
Interest
The amount of tax to be withheld is 10% of the total
interest paid.
Dividends
The non-resident withholding tax treatment of a
dividend will depend on whether it has been franked or is unfranked.
If a dividend is partially or completely unfranked,
non-resident withholding tax must be deducted from the unfranked amount
at the applicable rate which will depend upon the country of the residence
of the investor.
Time of Deduction
Non-resident withholding tax should be deducted/withheld
at the time of paying or crediting interest or dividends.
Remitting
of Amounts Withheld
The deduction made from the interest and/or dividend
payment must be sent by the investment body to the Australian Taxation
Office within 21 days after the end of the month in which the dividend
and/or interest is paid or credited to the investor.
Penalties
Severe penalties apply for non-deduction and/or
late payment of non-resident withholding tax.
