Edited version of private advice

Authorisation Number: 1051952726843

Date of advice: 18 February 2022

Ruling

Subject: Foreign resident PAYG withholding obligations

Question

Are you required under section 12-190 in Part 2-5 of Schedule 1 to the Taxation Administration Act 1953 (TAA) to withhold from payments that you make to Australian contributors?

Answer

No. You are not required under section 12-190 in Part 2-5 of Schedule 1 to the TAA to withhold from payments that you make to Australian contributors.

Relevant facts and circumstances

NonResCo

•                    You (NonResCo), are a company incorporated in Country X.

•                    You carry on an enterprise of producing, commissioning and publishing content for publication on your website.

•                    You have a limited presence in Australia. Specifically:

o        you make some supplies of goods in Australia, that is paper copies of a publication which you sell in Australia. Accordingly, you are registered for an ABN and for GST in respect of this activity.

o        You also have a small number of employees in Australia (e.g. to operate a XXXX). However, these employees produce different content from, and have no dealings with the contributors who are commissioned by you to produce content for publication on your website.

•                    Whilst you have a limited presence in Australia:

o        you do not have your central management and control in Australia (rather, your board of directors meets in Country X)

o        you do not have your voting power controlled by shareholders who are residents of Australia.

Freelance contributors

•                    Any story considered newsworthy, you would seek to produce a broad range of content covering the widest possible range of important issues. To do so, you rely heavily on contributions authored by freelance contributors. In this context, whilst you deal with contributors throughout the world, all references in this private ruling request are to contributors who are Australian residents, unless otherwise specified.

•                    You commission contributions from freelance contributors subject your terms and conditions.

•                    Some of the contributors who produce content for your publication are registered for GST and have provided you with their ABN and GST registration details.

•                    However, other contributors are not required to be registered for GST (e.g. because their turnover is below the GST registration threshold). Further, some contributors only produce content for your publication as a hobby (e.g. XXXX/XXXX).

•                    For the purposes of this ruling request, none of the contributors should be regarded as your employees.

Commissioning of contributions from contributors

•                    Your editor-in-chief (who is based in Country X) sets the global editorial strategy and vision for the entire NonResCo group. As part of this strategy, your editor-in-chief is primarily responsible for determining required content, including content required from contributors outside Country X.

•                    When you wish to engage a contributor, personnel who are employed in your XXXX Department formally communicate, in writing, confirmation of the terms of engagement. Your XXXX Department employees reside in Country X.

•                    As part of this formal engagement process managed by your employees in Country X, you also provide the contributor with the reference number/project code that a contributor requires to receive payment for their contribution (contributors cannot receive payment without quoting this reference number/project code).

•                    For the sake of administrative convenience, contributors may have some interactions with personnel employed by your Australian subsidiary as part of the process for preparing and submitting their contributions. However, your editor-in-chief retains the right to veto publication of any contribution submitted by a contributor.

•                    After a contribution has been submitted and approved, it is your Rights & Licensing team (i.e. personnel based in Country X) that is responsible for, inter alia, arranging for payment to the contributor to be processed by your Accounts Payable team.

•                    All payments to contributors are made electronically using Country X's payment system.

AusCo

•                    You have a subsidiary in Australia, AusCo.

•                    AusCo employs the Australian-based editorial team that are responsible for the day-to-day operations related to publication of content on the Australian version of your website.

•                    Personnel employed by AusCo may have some limited interactions with contributors. However, any such interaction is conducted in accordance with the editorial direction determined by your editor-in-chief.

Relevant legislative provisions

Taxation Administration Act 1953 - section 12-190 in Part 2-5 of Schedule 1

Reasons for Decision

Summary

You are not required under section 12-190 in Part 2-5 of Schedule 1 to the TAA to withhold from payments that you make to Australian contributors.

Detailed reasoning

Paragraph 12-190(4)(a) in Part 2-5 of Schedule 1 to the TAA states that the payer need not withhold an amount if the payment is made otherwise than in the course or furtherance of an enterprise carried on in Australia by the payer.

In this instance, you are not required to withhold from payments that you make to Australian contributors for the following reasons:

•                    We do not consider that you are carrying on your business in Australia through a fixed and definite place.

•                    Your employees in Australia have no dealings with Australian contributors.

•                    Notwithstanding that there may be some interaction between AusCo's employees and Australian contributors, AusCo does not act as agent for youand therefore does not carry on your business in Australia.

•                    You also do not have your central management and control in Australia.

•                    You are not in Australia in relation to the acquisitions from Australian contributors.