Private ruling: Withholding tax on natural resource payments
Published: March 2015
Ruling period: Year ending 30 June 2002 Year ending 30 June 2003 | Year ending 30 June 2004 Year ending 30 June 2005 | Year ending 30 June 2006 Year ending 30 June 2007 | Year ending 30 June 2008 Year ending 30 June 2009 | Year ending 30 June 2010 Year ending 30 June 2011 | Year ending 30 June 2012 Year ending 30 June 2013 | Year ending 30 June 2014 Year ending 30 June 2015 | Year ending 30 June 2016 Year ending 30 June 2017 | Year ending 30 June 2018 Year ending 30 June 2019 | Year ending 30 June 2020
Date scheme commenced: 1 July 2001.

Ruling: Q1: Is there an obligation to withhold an amount under subsection 12-325(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA) from payments required under the Deed? | A1: No.

Relevant facts and circumstances: 1. The Purchaser acquired a permit from the Vendor. 2. The Vendor is a foreign resident for taxation purposes. 3. The terms of the acquisition included an ongoing payment to be paid by the Purchaser to the Vendor. 4. The Deed defines the payments as a percentage of Sales Proceeds. 5. Sales Proceeds are defined as all revenue from the sale of resources from the acquired permit without any adjustments.

Relevant legislative provisions: Taxation Administration Act 1953 , 12-325(1) of Schedule 1.

Reasons for decision: Summary: Subsection 12-325(1) of Schedule 1 to the TAA states: 12-325(1) An entity must withhold an amount from a payment it makes to a foreign resident, or to 2 or more entities at least one of which is a foreign resident, if the payment is worked out wholly or partly by reference to the value or quantity of natural resources produced or recovered in Australia. The payments made under the Deed are to a foreign resident, however they are not 'worked out wholly or partly by reference to the value or quality of natural resources produced or recovered in Australia' for the purposes of subsection 12-325(1) of Schedule 1 to the TAA. Rather, these payments are worked out by reference to sale proceeds. Therefore no requirement to withhold an amount under subsection 12-325(1) of Schedule 1 to the TAA exists.