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  • What are my obligations?

    As a payer, you are required to withhold tax from payments to:

    • payees
    • workers who are not employees that have provided an ABN
    • suppliers carrying on an enterprise in Australia who do not quote an ABN.

    On this page:

    How much to withhold from payments

    You are required to withhold 3% of the total payment you make to a foreign resident business or individual for arranging casino gaming junket activities.

    You are required to determine if the JTO will be considered to be carrying on an enterprise in Australia to ascertain if an ABN should be provided. Often, they are entitled to one.

    When a JTO is entitled to an ABN and does not provide one, a ‘Statement by supplier’ should not be used in its place.

    Withholding when a payee does not quote an ABN

    If a foreign resident JTO payee is required to supply you with an ABN and they do not, you must withhold at the highest tax rate (47% from 1 July 2017).

    The withholding requirements where an ABN is not quoted takes precedence over the foreign resident withholding requirements. If you have withheld because an ABN was not quoted, you do not also withhold under foreign resident withholding rules.

    If you make payments to foreign resident JTOs who quote an ABN (or who are not required to quote an ABN), you must withhold at one of the following rates:

    • the varied rate specified on their PAYG variation notice
    • 3% from the payment you make if they do not have a PAYG variation.

    What if the payment is made in a foreign currency?

    You must report and pay amounts in Australian dollars.

    If you have to make a payment in a foreign currency, you need to calculate the equivalent Australian dollar value of the payment at the time you make the payment.

    After converting the foreign currency payment to Australian dollars, you then calculate the amount to withhold at the required rate.

    See also:

    PAYG withholding variation

    A foreign resident JTO payee may seek a variation where the required rate of withholding is lower or higher than the expected tax payable on their Australian taxable income. If a payee claims the prescribed rate is too low or too high, tell them to apply for a variation.

    A payee will need to apply for a variation if they believe they are not required to pay tax in Australia for either of the following reasons:

    • there is a tax treaty in place
    • where the income is exempt under Australian law.

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

    See also:

    Next steps:

    What do I do when I receive a variation notice for a payee?

    Where a payee has been granted a variation, we will send you a written variation notice confirming the new rate. Until you receive this notice, you must not vary the rate of withholding.

    When you receive a variation notice for the payee:

    • match the payee identity details on the notice with the payee identity details you have in your records    
    • you must use the varied rate to calculate how much to withhold from any future payments you make to the payee that are covered by the variation – continue to do so until the expiry date shown on the notice or until we advise you otherwise
    • keep a copy of the variation notice with your business records for five years.

    What do I do if I receive a variation withdrawal notice?

    If you receive a variation withdrawal notice for a payee from us:

    • match the payee identity details on the notice with the payee identity details you have in your records    
    • you must withhold 3% from the payment.
    • keep a copy of the variation withdrawal notice with your business records for five years.

    See also:

    Need more help? FRWvariation@ato.gov.au or call our hotline number 1300 306 105

    Payment summaries and reporting

    If you withhold from payments to a foreign resident, you have specific end-of year reporting obligations and you must do both of the following:

    You may also need to report details of all amounts you withheld because an ABN was not quoted. You can lodge this report by completing a withholding where ABN not quoted – annual report.

    You must lodge these reports by 31 October following the end of the financial year. You are not required to send copies of the payment summaries given to your payee, but you must keep copies for your records.

    Next steps:

      Last modified: 30 Jun 2017QC 17607