Withholding tax gross up / indemnification

Question

 · Accepted Answer

KylieATO · Answer

Based on the scenario below, withholding would need to be calculated on the gross payment amount that Company B (Australian) is making to Company A (Foreign resident). Therefore, irrespective of how they calculated the total gross payment required, if that amount is $110, withholding at 10% will be $11, and the net amount paid to Company A is $99. There are a lot more variables that are involved in foreign resident withholding which can determine what rate if any is used. For example; - Does Company A have an ABN? No ABN provided - What type of services are they providing? Rates for specific activities - Are they from a country that Australia has a DTA with? Tax Treaties - How long are they in Australia for? - Do they have a Permanent Establishment in Australia? - Are they entitled to apply for a foreign resident withholding variation? Section 15-15 and Variations If you were to supply us with more details to sportent.majorevents we could then provide a more definitive answer.

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