Private ruling: Non-resident PAYGW
Published: January 2015
Ruling period: Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015 | Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2012

Ruling: Question and Answer | Are amounts of money your charity provides to a non-resident outside of Australia subject to pay as you go withholding? | No

Relevant facts and circumstances: Your organisation is a charity. The principle function of your charity is to alleviate poverty in a foreign location. The charity provides support in the foreign location through the X Centre. The X Centre is a community centre which operates a health clinic. The X centre is an initiative financially sponsored by a number of entities, amongst which is your charity. The co-ordinator of the X centre is the payee. You state the payee is not a resident of Australia for tax purposes. The payee lost their usual supporting payments from another sponsoring entity during the financial year ended 30 June 2013. Your charity provides financial support to the payee in the absence of income support in order that the payee maintains a minimum standard of living.

Relevant legislative provisions: Section 6-5 of the Income Tax Assessment Act 1997

Reasons for decision: Summary: Subsection 6-5(3) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that ordinary income derived by a non-resident directly or indirectly from Australian sources, as well as other ordinary income included by a provision on a basis other than having an Australian source, is assessable. Gifts received for personal reasons, without any connection to an income producing activity on the part of the recipient or associate, are not assessable income. Here the recipient is a non-resident of Australia who even if they were performing services would be performing them outside Australia and therefore not taxable in Australia. In either case the payments would not be subject to PAYG withholding. Therefore, you are not required to withhold amounts of PAYG from your payments to the payee.