What is non-resident withholding?
Interest, dividend and royalty withholding tracked at the transaction, with the international dealings schedule fed properly.
If an Australian company pays interest, an unfranked dividend, or a royalty to someone who lives outside Australia, there is no certificate that has to be issued before the money leaves the country. That surprises founders who have dealt with India's Form 15CA/15CB regime, where a chartered accountant signs off on a remittance before a bank will process it. Australia runs the obligation the other way: the payer withholds tax at the moment of payment, remits it to the ATO on the normal PAYG withholding cycle, and then reports what was withheld once a year. There is no pre-clearance step and no third party who certifies a transaction before it goes out — the compliance is entirely after-the-fact reporting on top of correct withholding at source.
The rate that gets withheld depends on what is being paid and to whom. Interest, unfranked dividends and royalties paid to a non-resident each attract non-resident withholding tax (NRWT), and the rate is either set by a Double Tax Agreement between Australia and the recipient's country — sometimes as low as 0%, 5% or 10% — or defaults to 30% if no treaty applies or the recipient hasn't established treaty eligibility. Getting this wrong in either direction matters: withhold too little and the company is short on remittance with the ATO; withhold too much and the recipient is owed money back, which is its own administrative mess.
Who does what
Prepared for your registered tax agent; withholding determinations are theirs.
Who does what
| Your CapEasy team | Non-resident withholding, the reconciliations and reporting behind it, and the questions list that keeps it honest. |
| Your registered BAS or tax agent | Everything that carries a licence in Australia — rendered exactly as written: work out what goes on your bas, or advise you on it — under tasa 2009 that requires registration we do not hold. |
| You | One conversation with one named person, and the decisions that are genuinely yours. |
Non-resident withholding in Australia
The withholding rate is a treaty question, not a default you can assume
30% is the default NRWT rate on interest, unfranked dividends and royalties paid to a non-resident, but it is only the default — Australia's Double Tax Agreements set lower rates for many payee countries, and some royalty or interest categories fall as low as 0%, 5% or 10% depending on the specific treaty and the type of payment. Applying the wrong rate isn't a rounding error: it either under-remits to the ATO or over-withholds from the recipient. We flag every non-resident payment against the payee's country and any treaty documentation on file; your registered tax agent determines the applicable rate and treaty eligibility.
NAT 7187 is an annual report, not a per-transaction filing — and it has to tie to every payment made
The 'PAYG withholding from interest, dividend and royalty payments paid to non-residents – annual report' is lodged once a year, by 31 October, itemising every qualifying payment made during the year and the amount withheld per payee. Because it's annual, the itemisation has to be built as payments happen — reconstructing a year of interest, dividend and royalty payments to non-resident payees from scratch in October is how line items get missed. We build the itemisation at the transaction, so the report is an export, not a reconstruction.
The International Dealings Schedule is a separate trigger from NRWT itself
An entity with $2 million or more in international related-party dealings — or that trips thin-capitalisation or transfer-pricing thresholds — has to attach an International Dealings Schedule to that year's income tax return, on top of any NAT 7187 obligation. The two aren't the same thing: NRWT withholding and NAT 7187 apply because a payment was made to a non-resident; the IDS applies because the scale or nature of the cross-border related-party dealing crossed a threshold. A company can owe one without the other, or both. We check both triggers separately rather than assuming one implies the other; ATO thresholds are periodically revised, so the current-year figures are confirmed before a client's return relies on them.
Related-party cross-border dealings need contemporaneous transfer-pricing documentation, not after-the-fact justification
Where an AU entity has related-party dealings with an overseas parent or affiliate — an intercompany loan, a royalty on licensed IP, a management-fee arrangement — the ATO's transfer pricing rules expect documentation prepared at the time the arrangement is set up and priced, not assembled after the fact if the ATO asks. This sits alongside the IDS disclosure, not instead of it, and is a real penalty-exposure gap when it's missing.
What your registered BAS or tax agent receives from us
- A transaction-level withholding log — every interest, unfranked-dividend and royalty payment made to a non-resident payee during the period, matched to the payee's country and any treaty documentation on file.
- A draft NAT 7187 itemisation built progressively through the year, not reconstructed at year-end — ready for your registered tax agent to confirm rates and lodge.
- An International Dealings Schedule threshold check for the year — whether the $2m related-party dealings trigger, or the thin-capitalisation/transfer-pricing triggers, have been crossed, flagged before the return is due.
- A related-party cross-border dealings summary (intercompany loans, royalties, management fees) organised for the IDS disclosure, cross-checked against the general ledger.
- A remittance reconciliation confirming withheld amounts were paid to the ATO on the standard PAYG withholding cycle, matched against the withholding log.
- A treaty-rate exception log flagging any payment where the applicable DTA rate, or a payee's treaty eligibility, was ambiguous or undocumented.
