Non-resident withholding tax – interest, dividend or royalty

Where interest, dividend or royalty withholding tax has not been withheld, paid or not declared or reported correctly.

On this page

• What we focus on
• Amounts paid to foreign residents
• Additional guidance

What we focus on

We focus on:

• interest, dividend or royalty withholding tax that has not been withheld or paid
• situations where an incorrect amount of withholding tax is paid
• deductions for interest or royalty payments to an offshore entity being incorrectly claimed or misclassified on tax returns
• a withholding tax exemption or tax treaty relief being incorrectly claimed
• situations where an entity pays interest, dividends or a royalty to a non-resident and fails to lodge, by 31 October, either    
  • a PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report
  • an Annual investment income report  
• situations where entities defer their interest to avoid or defer withholding tax and claim deductions on an accruals basis
• arrangements where offshore related entities are used to facilitate the avoidance of interest withholding tax in relation to interest expenses deducted against Australian-sourced income and paid to non-residents
• offshore entities that claim a credit for tax withheld without declaring income
• situations where there are discrepancies between the amounts    
  • claimed as deductions for interest or royalty payments on the tax return
  • reported as withheld and paid on the activity statement or annual report. 

Amounts paid to foreign residents

For more information on amounts paid to foreign residents, see Investment income and royalties paid to foreign residents.

Additional guidance

Additional guidance can be found in our Taxpayer Alerts:

• TA 2018/4 Accrual deductions and deferral or avoidance of withholding tax
• TA 2020/3 Arrangements involving interposed offshore entities to avoid interest withholding tax