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Edited version of your written advice
Authorisation Number: 1012754445057
Ruling
Subject: Non-resident PAYGW
Question and Answer
Are amounts of money your charity provides to a non-resident outside of Australia subject to pay as you go withholding?
No
This ruling applies for the following period(s)
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
The scheme commences on
1 July 2012
Relevant facts and circumstances
Your organisation is a charity.
The principle function of your charity is to alleviate poverty in a foreign location.
The charity provides support in the foreign location through the X Centre. The X Centre is a community centre which operates a health clinic.
The X centre is an initiative financially sponsored by a number of entities, amongst which is your charity.
The co-ordinator of the X centre is the payee.
You state the payee is not a resident of Australia for tax purposes.
The payee lost their usual supporting payments from another sponsoring entity during the financial year ended 30 June 2013.
Your charity provides financial support to the payee in the absence of income support in order that the payee maintains a minimum standard of living.
Relevant legislative provisions
Section 6-5 of the Income Tax Assessment Act 1997
Reasons for decision
Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that ordinary income derived by a non-resident directly or indirectly from Australian sources, as well as other ordinary income included by a provision on a basis other than having an Australian source, is assessable.
Gifts received for personal reasons, without any connection to an income producing activity on the part of the recipient or associate, are not assessable income.
Here the recipient is a non-resident of Australia who even if they were performing services would be performing them outside Australia and therefore not taxable in Australia.
In either case the payments would not be subject to PAYG withholding.
Therefore, you are not required to withhold amounts of PAYG from your payments to the payee.
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