Withholding from payments to foreign residents for entertainment or sports activities
Use this guide if you are a payer who makes payments to foreign residents who work or take part in entertainment or sports activities.
If you engage a foreign resident as an employee, you continue to withhold from those payments under the pay as you go (PAYG) withholding rules that apply to employees.
Different withholding rules apply to dividend, interest or royalty payments made to foreign residents.
Find out more
For more information, you can:
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- visit PAYG withholding
- phone us on 13 28 66 between 8.00am and 6.00pm, Monday to Friday
- speak to your tax adviser.
Payer and payee
The payer is the person or entity making a payment; the payee is the person or entity receiving a payment.
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Payments subject to withholding
You are required to withhold amounts from payments you make to foreign residents for entertainment or sports activities, including the activities of a performing artist or sportsperson.
Examples of payments to foreign residents that are subject to PAYG withholding are:
- appearance payments
- player of the series awards
- endorsement fees
- expense reimbursements
- match payments
- performance fees
- preparation fees
- sponsorship payments
- fees for public speaking or providing sports commentary
- non-cash benefits, including the dollar value of significant prizes received such as a motor vehicle or holiday.
You don’t need to withhold from payments made to entertainers and sportspersons who are residents of the United States if their gross income from working in Australia is less than $10,000 US.
You do not need to issue payment summaries to payees for these payments.
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Entertainment activities include the activities of a performing artist using intellectual, artistic, musical, physical or other personal skills by performing or presenting to an audience, such as:
- giving a musical performance
- performing in a play
- speaking publicly
- taking part in a display
- undertaking a promotional or similar type of activity.
This also includes performing, appearing or working on the production of a film, tape, disc, television or radio broadcast.
Withholding may also apply to foreign resident entertainers and sportspeople participating in the activities listed above, even if the activities are of a political, religious, social or charitable nature.
‘Sports activities’ include, but are not limited to:
- team sports – for example, cricket, rugby league, rugby union, soccer or netball
- individual sports – for example, golf, tennis, surfing, triathlon or cycling
- other activities – or example, motor or horse racing.
Sporting and entertainment groups
Payments for entertainment or sports activities subject to foreign resident withholding are not restricted to individuals, but also apply to sporting or entertainment groups. These groups include sporting teams, theatre companies, orchestras or touring bands. Amounts may also have to be withheld from payments to individual foreign residents who provide their services through their own corporate entities.
Sports support staff
You must also withhold amounts from payments you make to the foreign resident support staff of foreign residents involved in sports activities. Support staff includes, but is not limited to:
- personal trainers
- sports psychologists.
Entertainment support staff
You are not required to withhold amounts from payments made to the foreign resident support staff of foreign residents involved in entertainment activities if they:
- are residents, for tax purposes, of a country with which Australia has an international tax agreement
- reside in Australia for no more than 183 days in the financial year.
Support staff includes, but is not limited to:
- directors of photography
- production designers
- film editors
- musical directors
- set designers
- costume designers
The rate of withholding has been varied to nil because these payees will not have a tax liability in Australia. They are not required to obtain a tax file number (TFN) or an Australian business number (ABN).
Payments to third parties
In some circumstances, you may have to make payments to an agent on behalf of a foreign resident. You should withhold from payments made to an agent as though the payment were made directly to the foreign resident – this applies even if the agent is a resident in Australia.
If an agent receives a payment subject to foreign resident withholding on behalf of an overseas resident and an amount has not already been withheld from that payment by the payer, the agent must withhold from the payment.