Taxation of Foreign Residents for Casino Gambling Activities
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Gameplay Experience: First-Hand Insights and Observations
If you are going to arrange casino gaming activities through foreign residents, you will need comprehensive information about all regulatory nuances. And taxation is no exception!
What are my obligations? Or When should I pay taxes? These are the two key questions most starters in the field will surely face at the earlier stages of their activity. And finding to-the-point information on these aspects is a must if you want to follow all existing rules as well as manage your finances effectively.
One thing that is important to note is that if you are making interest, royalty, or dividend payments to non-native residents, this information is not for you, as different withholding rules apply.
This information will assist you if you pay foreign residents to arrange casino gaming junket activities. Under the existing pay-as-you-go (PAYG) withholding rules, you have to withhold tax from these payments.
When You Should Withhold Tax
If you are a business owner who arranges for foreign players to come and gamble, for example, at https://payid-casinos.com/ in Australia, you automatically fall under the category of JTO – casino gambling junket tour operators.
Typically, services offered by JTOs include the following:
- Contracting with gamers;
- Contracting with gambling operators;
- Management of credits and debts;
- Recording gambling statistics of a player;
- Casino liaison and management;
- Funds repatriation;
- Management of local funds;
- Providing liaison services for customers like interpreting and translating as well as additional related services such as transportation, hotel accommodation, and entertainment.
So, according to the Australian Taxation Office, you may make payments to foreign residents in the form of:
- Cash payments, which can cover a commission depending on the gaming activity or incentives losses of people, such as hotel accommodation, flights, in-house services, foods and beverages, and so on.
- Non-monetary benefits are a way to reward them for bringing more people to gamble in a casino.
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Also, remember that in some cases, you may need to make payments to a third-party agent who acts on behalf of a foreign gambler. It means even though you were paying the foreigners directly, you still have to withhold from your payments to such an agent as well. This is required even if the agent is an Australian resident.
Your Obligations as a JTO
Let’s get acquainted with the main obligations the Australian Taxation Office prepared for you here.
As a payer, you are required to withhold tax from payments to:
Not employee workers that have provided an ABN;
Payees;
Suppliers who don’t quote an ABN but carry on an Australian enterprise.
Not that many, right?
How Much Should You Withhold From Payments
The next essential question is related to the amount you should withhold from payments.
According to the Australian Taxation Office, you must withhold 3% of the payment you make to an individual or a foreign resident business that arranged casino gambling junket activities.
In addition, to make sure whether an ABN needs to be provided, you should also determine whether the JTO will be considered to be operating a company in Australia. Typically, they are eligible for one.
However, if a Junket Tour Operator is eligible for an ABN but doesn’t give one, you can’t use “Statement by Supplier” in its place.
How to Withhold from Payments in The Absence of ABN
In case there is a requirement for a JTO payee who is not an Australian resident to provide you with an ABN but they don’t, from 1 July 2017, you should withhold at the highest tax rate – 47%.
When an ABN is not quoted, the withholding requirements take priority over the withholding requirements of foreign residents. Let’s imagine you have withheld just when there was no quoted ABN. Then, you don’t need to withhold under the withholding rules of foreign residents as well.
There is also the option to make payments to foreign residents who quote or are not required to quote an ABN. In this case, you should withhold at one of these rates: the specific varied rate you can fund on their notice of PAYG variation and 3% from the total payment you make in the absence of the PAYG variation.
Rules for Payments Made in Foreign Currencies
There are also numerous cases when payments are made in foreign currency. If you are in such a situation, the first thing you should do is to report and pay in Australian dollars.
However, if you must pay in a foreign currency, you should calculate the payment’s equivalent value in Australian dollars at the time of the transaction.
Once converted to Australian dollars, you can then calculate the withholding amount at the required rate.
Some Final Notes to Keep In Mind
At the end of every year, there are some specific reporting obligations you should follow if you withhold from foreign resident payments. In general, all you need to do includes the following:
1. Sending the Australian Taxation Office an annual report of PAYG summary;
2. Provide foreign residents with foreign residents summary.
You should send all these summaries and reports by the end of October of each financial year. Also, even though you are not required to provide copies of these reports, it’s always a good idea to keep them for your records.
