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  • How much to withhold

    The amount you withhold depends on:

    • the type of activity undertaken
    • whether the worker is an employee or not
    • whether an ABN is provided or not.

    On this page:

    Withholding from entertainment or sports activities

    If the payee is:

    • a foreign resident company (ABN supplied), you should withhold at the company tax rate
    • an individual foreign resident, you should withhold at the individual foreign resident income tax rate.

    Film industry

    Where the payment is to an individual foreign resident, you withhold at an average tax rate calculated on the total payment amount for the financial year.

    Example

    Christian is an individual foreign resident actor. As outlined in his contract, he will receive five payments over the Australian income year, ending 30 June 2017, from his home country film company. These payments are for his personal performances while filming in Australia. The amounts are:

    • $25,000
    • $30,000
    • $50,000
    • $40,000
    • $25,000.

    The company adds the payments together to give the total amount that will be paid in that income year. It then applies the rates for non-resident individuals to determine the tax payable for the financial year:

    Step 1 – Total payments for the financial year

    $25,000 + $30,000 + $50,000 + $40,000 + 25,000 = $170,000

    Step 2 – Amount to be withheld from $170,000 = $28,275 + ($83,000 x 0.37)

    = $28,275 + $30,710 = $58,985

    Step 3 – Average tax rate

    To calculate the average tax rate, the company will need to divide the answer at Step 2 by the answer at Step 1, and multiply by 100:

    ($58,985 ÷ $170,000) × 100 = 34.7%

    So, the rate the company would withhold on each of the five payments by the film company is the average rate of 34.7%.

    • $25,000 × 0.347 = $8,675
    • $30,000 × 0.347 = $10,410
    • $50,000 × 0.347 = $17,350
    • $40,000 × 0.347 = $13,880
    • $25,000 × 0.347 = $8,675

    Total amount withheld is $58,990

    End of example

    Withholding from construction and related activities

    For foreign residents you should withhold 5% of the total payment.

    Withholding from casino gaming junket activities

    For foreign resident businesses or individuals you should withhold 3% of the total payment.

    The JTO is often entitled to have an Australian business number (ABN). If they are entitled to one but don't provide it, a Statement by supplier should not be used in its place.

    Withholding when no ABN is supplied

    If you have to withhold tax from a foreign resident involved in any of these activities, and they don't supply you with an ABN, you will need to withhold from payments at the top tax rate.

    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.

    Withholding from when a variation is requested

    The withholding amount could be different if the payee requests a variation.

    Next step:

    See also:

      Last modified: 06 Feb 2018QC 17608