Office of FINANCIAL SERVICES
(A) Payments when an ABN is not quoted
Under PAYG withholding, if a business supplies goods or services to another and does not quote an Australian Business Number ("ABN") on their invoice, the business that receives the goods or services is required to withhold 46.5% from the payment to the supplier and remit this amount to the ATO.
This 46.5% withholding for no ABN does not apply when:
- the payment does not exceed $75 GST exclusive
- the supply is made in the supplier's private capacity, or as their hobby;
- the payment is exempt income for the supplier (for example, the supplier is a non profit body
- the payment is to a non-resident who is not carrying on a business in Australia or through an agent in Australia
- the supplier is not an enterprise because they have no reasonable expectation of profit or gain
The University does not deal with entities that do not have an ABN, unless they provide:
- A signed Statement by supplier (PDF) provided by ATO that sets out conditions (2) to (5) above
(B) Payments of Interest, Royalties and Dividends to Non-residents
The PAYG system requires withholding from payments of interest, dividends and royalties that are made to entities that are non-residents of Australia .
Generally, you must withhold from such payments where:
- they are made to a recipient, which has its address outside Australia . In relation to dividends, this will be the address according to the register of the company’s members. For royalties, the address should be according to the records in your possession relating to the transaction;
- or where you have been authorised or directed by the recipient to pay the interest, dividend or royalty at a place outside of Australia .
How much is required to be withheld
The University is required to withhold under the PAYG Withholding provisions at the time of making the payment. The amount to be withheld will depend on which country the person receiving payment is a resident of and whether Australia has a double tax agreement with that country. Please check with Business Services Unit regarding amount to withhold. The tax withheld will be remitted to the ATO in accordance with the PAYG provisions
(C) Reimbursements Based on Cents per Kilometre
Private Vehicle Allowances calculated on a Cents per Kilometre basis are paid via the payroll system and included on the Individuals Payment Summaries
(D) Travel Allowances / Per Diems
Tax instalments do not have to be deducted from an allowance that is paid to an employee to cover "travel expenses" incurred in the course of employment, provided that the rate of allowance is within what the Tax Office considers to be reasonable.
The ATO publishes a Determination each year which details such amounts (For 2005/2006 this is TD 2005/32 while for 2006/2007 it is TD 2006/43) within the reasonable limits are not shown on the employee’s payment summary, and are Tax-exempt.
"Travel expenses" for these purposes means accommodation, food, drink and incidentals in respect of travel within Australia but away from the employee’s ordinary place of residence where the travel is considered in the course of performing duties.
(E) Overtime meal allowance
The ATO has set the reasonable allowance amount for overtime meal payments. Currently, MU staff awards do not exceed the ATO allowance set by the ATO.
Therefore there is no withholding tax liability in respect of overtime meal allowances.
- Statement by supplier (PDF) Provided by the ATO that sets out conditions (2) to (5)