![]() ![]() Having an employee based overseas may result in the company being regarded as having a "permanent establishment" in the country in which the employee is resident - and this can have very significant tax implications - both in terms of compliance and liabilities. With respect to payroll tax, where employees are working in another country, with an assignment duration of more than six months, state or territory based payroll taxes will not normally be payable. Employer contributions to Australian superannuation may also be taxable as income in the individual's country of residency. Furthermore, fringe benefits tax (FBT) will not be applicable in relation to a non-resident employee unless it relates to former employment in Australia.Īn Australian employer does not need to make superannuation guarantee (SG) contributions in respect of a non-resident employee for services performed outside of Australia, unless a "Certificate of Coverage" has been issued under a bilateral Social Security agreement.īear in mind, however, that regardless of the individual being non-resident for Australian purposes, Australian employers may still be required to make social security contributions in relation to their employee in the employee's country of residence and individual advice should be sought. This disregards the fact that even establishing an individual's tax residence can be difficult - particularly with new residency tests now pending - and is very dependent on their unique circumstances. Indeed, the ATO has recently demonstrated a reluctance to repay these withholdings on the basis that the individual simply shouldn't have been on an Australian payroll. In this context, it is usually not appropriate to maintain them on an Australian payroll, deducting PAYG - this will require the employee to later lodge an objection with the ATO to recover incorrect PAYG tax withholdings. Individuals who are not Australian tax residents and resident in a foreign country, other than on a short-term basis, are likely to be only taxable in that country with respect to any earned remuneration, rather than in Australia. To provide some perspective, bear in mind the general comments made below: ![]() Seeking professional advice at the start of these arrangements can avoid some serious tax implications and consequences that can be very expensive and take years to unravel with the ATO and other tax authorities. International remote working can be very productive for both employers and employees, but our experience is that, outside of major international employers, much more care needs to be taken in terms of how employees are remunerated and taxed, and indeed whether individuals should remain employees. We anticipate that this will increase markedly over time, given the tremendous increase in remote working that we have seen across virtually all sectors of the economy as a result of the Covid pandemic. Over the past few years we have noticed a gradual increase in the number of Australian and other nationalities working remotely for Australian companies while resident overseas. Working Remotely out of Australia – Broad Tax Implications Australian Mortgages for New Zealanders. ![]()
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