Financial Services

Payments of Interest, Royalties and Dividends to Non-Residents Policy

Further information

The Pay-as-you-go (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
  • where you have been authorised or directed by the recipient to pay the interest, dividend or royalty at a place outside of Australia.

Policy statement

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.

Check with your Payroll/Human Resources contacts to establish the rate of withholding.

Royalties

Royalties are defined in the Australian domestic taxation legislation as detailed below and in Double Tax Agreements (note: the definition of a royalty varies between Double Tax Agreements).

In broad terms, "royalty" includes any amounts paid or credited as consideration for:

  • The use of, or the right to use any:
    • copyright
    • patent
    • design or model
    • plan
    • secret formula or process
    • trade-mark
    • other like property or right or
    • industrial, commercial or scientific equipment.
  • The supply of scientific, technical, industrial or commercial knowledge or information ('know how').

  • The supply of any assistance in relation to the application or enjoyment of, any such property or right as is mentioned above.
  • The reception of, or the right to receive, visual images or sounds, transmitted to the public by:
    • satellite or
    • cable, optic fibre or similar technology.
  • The use in connection with television broadcasting or radio broadcasting, or the right to use in connection with television broadcasting or radio broadcasting, visual images or sounds, or both, transmitted by:
    • satellite or
    • cable, optic fibre or similar technology.
  • The use of, or the right to use:
    • motion picture films
    • films or video tapes for use in connection with television
    • tapes for use in connection with radio.
  • A total or partial forbearance in respect of the use of, or the granting of the right to use, any such property or right as is mentioned above.

The above definition of a royalty may be modified by a Double Tax Agreement, which Australia has with the country where the recipient is a resident. It is important that the payment is reviewed to establish whether it is a royalty as defined in the relevant Double Tax Agreement.