PAYG withholding from interest, dividends and royalties paid to non-residents

Within this publication, foreign resident is the same as non-resident.

Withholding tax from payments you make

If you pay interest, dividend or royalty payments to a foreign resident; that is, someone who is not an Australian resident, generally, the gross amount of each of those payments is subject to a final withholding tax rate of:

• 10% for interest
• 30% for dividends - fully franked dividends are not subject to withholding tax
• 30% for royalties.

However, if the payment is made to resident of a country with which Australia has a tax treaty, you may be required to withhold less tax or no tax at all.

Tax treaties are special agreements that Australia has entered into with over 40 countries. The tax treaties prevent the same income being taxed more than once.

The reduced tax rate that applies under a tax treaty only applies if the recipient of the dividend, interest or royalty is both:

• a resident of the particular tax treaty country
• beneficially entitled to that income.

A foreign resident can be an individual, company, partnership, trust or super fund.

Sections within Withholding tax from payments you make

• Registering for PAYG withholding
• Your obligations
• Your payees' obligations
• Collecting and paying withholding tax
• Australian resident living overseas temporarily
• When to withhold
• How withholding tax is collected
• Exemptions