• Withholding declarations

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    A payee may use a Withholding declaration (NAT 3093) to advise you of a tax offset they choose to claim through reduced withholding from you. For more information, see Claiming tax offsets.

    Payees can also use a Withholding declaration to advise you of any changes to their situation that may affect the amount you need to withhold from their payments.

    Changes that may affect the amount you need to withhold include:

    • becoming or ceasing to be an Australian resident for tax purposes
    • claiming or discontinuing a claim for the tax-free threshold
    • advising of a HELP or FS debt, or changes to them
    • upward variation to increase the rate or amount to be withheld.

    When your payee provides you with a Withholding declaration it will take effect from the next payment you make. If you receive an updated declaration from a payee, it will override the previous one.

    Attention

    A valid Tax file number declaration must be in place before your payee can provide you with a Withholding declaration.

    End of attention

    What if your payee is a foreign resident?

    If your payee has answered no to the question ‘Are you an Australian resident for tax purposes?’ on their Tax file number declaration, you will need to use the foreign resident tax rates.

    There are two ways you can withhold from a foreign resident’s earnings:

    • If they have not given you a valid TFN, you need to withhold 45% for each $1 of earnings (ignoring any cents).
    • If they have given you a valid TFN, you need to withhold the amount calculated in the foreign resident tax rates below, rounding any cents to the nearest dollar.

    Table B: Foreign resident tax rates

    Weekly earnings
    $

    Weekly rate

    0 to 1,538

    32.5 cents for each dollar of earnings

    1,539 to 3,462

    $500 plus 37 cents for each $1 of
    earnings over $1,538

    3,463 and over

    $1,212 plus 47 cents for each $1 of
    earnings over $3,462

    Generally, foreign resident payees cannot claim tax offsets. In limited circumstances, they may be entitled to claim a zone or overseas forces offset. If your foreign resident payee has claimed a tax offset on the Tax file number declaration, you don’t need to make any adjustments to the amount you withhold.

    Last modified: 18 Feb 2015QC 39418