Payer obligations
If you make any of the payments described in the section 'What payments are subject to foreign resident withholding?' in this document, you must:
- be registered for pay as you go (PAYG) withholding
- withhold amounts from payments
- report and pay withheld amounts
- issue payment summaries to payees and report on the payments annually to the ATO.
Registering for PAYG withholding
If you make a payment that is subject to PAYG withholding (including foreign resident withholding) to foreign residents for sports activities undertaken in Australia, you must register as a payer under the PAYG withholding system.
Withholding amounts from payments
Under PAYG withholding, you must withhold amounts from payments you make to a foreign resident and send these amounts to the ATO. As a payer, you withhold amounts from both:
- payments to payees
- payments to a supplier carrying on a business in Australia who has not quoted an ABN.
Example
Tony is an individual foreign resident cricket player. He receives three match fee payments from his home country cricket board specifically for his personal performances in matches while competing in Australia. His home country cricket board has a sufficient connection with Australia for the purposes of Australia's PAYG withholding system. The amounts of the three match fee payments are:
Tony is not required to provide an ABN. To calculate the amount to withhold, the foreign cricket board takes each payment as being the amount earned for the entire financial year and applies the appropriate tax rate from table A.
Payment 1 - $25,000
Payment x tax rate = withholding amount
= $25,000 x 0.29
= $7,250
Payment 2 - $40,000
Payment x tax rate = withholding amount
= $10,730 + ($3,000 x 0.30)
= $10,730 + $900
= $11,630
Payment 3 - $25,000
Payment x tax rate = withholding amount
= $25,000 x 0.29
= $7,250
The total amount to be withheld from the three payments by the foreign cricket board is $26,130 ($7,250 + $11,630 + $7,250).
Reporting foreign resident withholding amounts to the ATO
When and how you report and pay amounts to the ATO depends on whether you are a small, medium or large withholder. To determine whether you are a small, medium or large withholder, we look at how much your total withholding is, or is likely to be, each year.
How to pay withheld amounts to the ATO
If you are a small or medium withholder, you can pay withheld amounts (along with other amounts payable) to the ATO:
- electronically, via BPAY®, (direct debit or direct credit)
- credit card
- by mailing a cheque or money order with your activity statement, or
- by taking your original pre-printed payment advice to any Australia Post outlet and paying by cash (up to $3,000), cheque or EFTPOS.
Large withholders must pay their withholding amounts electronically through, BPAY, direct credit or direct debit.
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For more information about:
- BPAY, credit card, direct credit, mail or post office payments, phone us on 1800 815 886, between 8.00am and 6.00pm, Monday - Friday or email payment@ato.gov.au
- paying your tax, go to www.ato.gov.au/howtopay
- direct debit or to obtain a direct debit form, phone us on 1800 802 308 between 8.00am and 6.00pm, Monday - Friday or email eft-information@ato.gov.au
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® Registered to BPAY Pty Ltd ABN 69 079 137 518.
Issuing payment summaries
You must provide each foreign resident with an annual payment summary and part-year payment summaries when requested in the approved form. This document should include details of the gross amounts paid and amounts withheld from these payments. It provides information the payee needs to prepare their tax return. The obligation extends to agents (intermediaries) where they were required to withhold.
When issuing a payment summary for withholding where the payee has not quoted their ABN, you can:
Self-prepared payment summaries must include:
- a title, for example, PAYG withholding payment summary - foreign residents
- the period covered by the payment summary
- payer's name
- payer's ABN or withholding payer number (WPN)
- payer's branch number (if applicable)
- payee's name (if known)
- payee's address (if known)
- payee's ABN, tax file number (TFN) or taxpayer identification number (TIN) (if known)
- payee's country of residence for tax purposes
- amount of total payment (including the market value of non-cash benefits)
- total amount withheld
- the words 'To be retained by the payee for tax purposes'.
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The document must be in English and signed by you as the payer.
You should give the original to the payee and keep a copy for your records. You can keep either an electronic or paper copy.
You do not need to send copies of these payment summaries to us.
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Example: Self-prepared payment summary
PAYG withholding payment summary - foreign residents
Payment summary for period 01/07/2010 - 30/06/2011
Payer details
Payer: Foreign Cricket Board
Payer ABN: 12 345 678 900
Payee details
Payee: Tony Ramos
Payee address: 1 El Centro Paseo, Mexico City, Republic of Mexico
Payee's country of residence for tax purposes: Mexico
Payee TFN: 98 765 432
Payee ABN: 11 222 333 444
Payee TIN: -
Total gross payments $200,000
Total amount withheld $69,630
To be retained by the payee for tax purposes
Annual reports
If you withhold from payments you make to a foreign resident (including where you had to withhold as an agent or intermediary), you must send an annual report to us in the approved form.
Your annual report must detail all payments and amounts withheld from foreign residents in a financial year. Non-cash payments provided to a foreign resident should also be recorded on the annual report to us.
If you have withheld an amount from a foreign resident because they have not supplied an ABN, you must separately report details of all these amounts.
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For further information, go to:
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Last Modified: Thursday, 23 August 2012