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Australian Withholding Tax Rates: Non-Residents

Australian Non-Resident Withholding Tax Rates

Non-resident withholding taxes are a final tax on certain Australian sourced income that is not subject to income tax. Australian expatriates or foreign investors who are non-resident for Australian tax purposes pay these rates of withholding tax on certain Australian sourced investment income.

When an Australian expatriate proceeds overseas they should advise their bank(s) and investment managers of their new overseas address, and typically this will lead to withholding tax being automatically deducted from their investment or interest earnings, with no need to lodge an Australian tax return if this is an expatriate's only Australian sourced income.

The table below provides an indication of the rates of withholding tax applicable when an expatriate or foreign investor is based in a country with which Australia has, or does not have, a Double Tax Agreement (DTA).

Type of Payment Non-Tax Treaty
Country
Tax Treaty Country
(Indicative rates - refer to DTA)
Unfranked Dividends 30% Generally 15%
Franked Dividends 0% 0%
Interest 10% Generally 10%
Royalties 30% Generally 10%

Note that Australian banks frequently contact clients to confirm their tax residency status. If an expatriate does not advise the bank or investment manager that they have proceeded overseas and become non-resident, and as a consequence withholding tax is not deducted from their interest or investment earnings, then there will be a need to submit individual tax returns for the particular years in question. This is quite a regular occurrence, but preferably avoided.

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