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Calvin_Dad(Newbie)Newbie
28 Aug 2024

Hi all,


My company hired a lady as an On-call Telehealth Nurse last December. She lived in Jordan since she was employed. And she isn’t an Australia’s tax resident.


I know if someone is a non-tax resident performing work overseas, the income should be deemed to be foreign-sourced (non-taxable). However, our payroll service provider kept withholding her tax as a foreign resident with the highest tax bracket until she requested us to fix this problem for her tax return recently. Her tax agent said we need to reverse this issue and reimburse her for the withheld tax.


All her withholding tax has been paid to ATO and our annual report file has been lodged with ATO.


I want to ask how to fix this issue and reclaim the withheld tax already paid.


Thank you.

1,383 views
3 replies
1,383 views
3 replies

Most helpful response

Most helpful reply

Matt_ATO(Community Support)Community Support
29 Aug 2024

Howdy @Calvin_Dad,


You will need to complete the “Refund of over-withheld withholding” application form (NAT 75265). This form is used to request a refund of tax that was over-withheld from a non-resident.


Be prepared to provide supporting documentation:

  • such as proof of the employee’s non-resident status,
  • the amounts withheld and
  • any correspondence with the payroll service provider.

Ensure that your payroll records are adjusted to reflect the correct tax treatment for the employee. This may involve issuing amended:

  • payment summaries or
  • income statements.

Once we process the refund. Reimburse the employee for the over-withheld tax.



All replies

Most helpful reply

Matt_ATO(Community Support)Community Support
29 Aug 2024

Howdy @Calvin_Dad,


You will need to complete the “Refund of over-withheld withholding” application form (NAT 75265). This form is used to request a refund of tax that was over-withheld from a non-resident.


Be prepared to provide supporting documentation:

  • such as proof of the employee’s non-resident status,
  • the amounts withheld and
  • any correspondence with the payroll service provider.

Ensure that your payroll records are adjusted to reflect the correct tax treatment for the employee. This may involve issuing amended:

  • payment summaries or
  • income statements.

Once we process the refund. Reimburse the employee for the over-withheld tax.



Calvin_Dad(Newbie)Newbie
3 Sept 2024

Hi Matt,


Thank you for your reply.


There are still some questions I want to ask below:


Who should complete the “Refund of over-withheld withholding” application form (NAT 75265)? Our company or the employee?


Which type of payment or distribution should we choose?

1. interest, dividend or royalty payments

2. managed investment trust (MIT) distributions


Should all support documents be submitted with the application form?


Thank you!


Matt_ATO(Community Support)Community Support
4 Sept 2024

Howdy @Calvin_Dad,


You can forget about the form, I've done some more research and it's for a different situation, my apologies.

 

What you have to do instead is adjust your payroll records to reflect the correct info with us. When this is corrected, you'd then need to pay the employee the amount that had been mistakenly withheld.


Here's further info about amending PAYG withholding payment summaries.

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How do amend and reclaim the withholding tax for the foreign-sourced income? | ATO Community