• Withholding from investment income

    Investment bodies (such as banks, building societies, unit trusts or public companies) must withhold an amount from the interest or dividends they pay.

    However, this rule does not apply to your not-for-profit (NFP) organisation if you have done either of the following:

    • quoted your organisation's ABN (where it holds the investment in the course of running an enterprise) or TFN to the investment body
    • claimed an exemption from quoting your organisation's TFN to the investment body.

    Quoting your organisation's ABN or TFN to your investment body is not compulsory. However, TFN withholding may apply if you don't.

    You can quote your organisation's ABN or TFN by visiting, or writing to, your investment body.

    Claiming an exemption from quoting a TFN or ABN

    Your organisation may be able to claim an exemption from quoting ABN or TFN if it is not required to lodge income tax returns.

    Your organisation is not required to lodge an income tax return if it is either of the following:

    • a non-profit company that is resident in Australia and whose taxable income (not just interest or investment income) is $416 or less per annum
    • an NFP organisation such as a charity, club, society or association whose income is exempt under tax law.

    You must advise the investment body in writing that your organisation is claiming an exemption from quoting a TFN. We do not provide a specific form for this purpose, so your written advice to the investment body should include:

    • your organisation's name and address
    • details of the accounts and investments your organisation is claiming an exemption for
    • the reason your organisation is not required to lodge an income tax return.

    If your organisation is not required to lodge an income tax return because it is a non-profit company that is resident in Australia whose taxable income is $416 or less per annum, you can state the following reason:

    The organisation is claiming an exemption from quoting a tax file number because it is an NFP organisation that is not required to lodge an income tax return.

    If your organisation is income tax exempt under tax law, you can state the following reason:

    The organisation is claiming an exemption from quoting a tax file number because it is an income tax exempt organisation that is not required to lodge a tax return.

    The advice you provide should be signed by an eligible representative of your organisation, such as the public officer, your secretary or, if you are not an incorporated association, another office holder.

    The income tax law does not require you to produce a statement or certificate from us to prove your status to your investment body. Stating the reason for the exemption in writing is sufficient.

    You must advise your investment body as soon as possible if both of the following apply to your organisation:

    • it previously claimed an exemption from quoting a TFN on a bank account or investment
    • due to a change in its tax status, it had to lodge an income tax return.

    Your organisation can incur a penalty of $1,000 if you do not inform your investment body about your organisation's change in tax status within two months after the end of the year of income in which the change occurred.

    See also:

    Refunds

    Refund or credits for amounts withheld

    Refunds can be claimed directly from either your investment body or us, depending on the circumstances.

    Refunds from an investment body

    If your investment body withholds an amount in error, you can apply to them to refund it. They must refund this amount if:

    • you apply for a refund by 30 June of the financial year in which the amount was withheld
    • they become aware of the error by 30 June of the financial year in which they withheld it.

    Refunds from us

    If your organisation is required to lodge an income tax return, you can claim a credit for the amounts withheld in its tax return for the year in which the amount was withheld.

    If your organisation is not required to lodge an income tax return, you can claim a refund directly from us where either of the following applies:

    • amounts were withheld in error and your organisation did not apply to the investment body for a refund within the prescribed time
    • amounts were withheld correctly and your organisation is entitled to claim an exemption from quoting a TFN but had not done so.

    Next steps:

    See also:

    • For more information on whether your organisation needs an ABN or TFN, see Registering.
    Last modified: 20 Jul 2015QC 16410