23rd November 2021 | Tax
Due to the long lockdown recently, many companies are comfortable with the work from home arrangements. Not only for employees but also for employers. The implementation allows the employees to work from home at any location even if they are to be overseas.
These changes have been effective for businesses and individuals. However, businesses and individuals should be aware of the Tax implications overseas to avoid a massive tax bill. Businesses will need to comply with payroll rules and reporting obligations. Get specific advice for both Australia and in the country, they are moving to.
For example: If an employee moves to Singapore but continues to work for an Australian company, the Singapore authorities may decide the company should be treated as a Singapore employer, even if the it doesn’t have any customers or an office there, with the resulting registration and reporting obligations in Singapore.
Each state and country has its own tax implications. For instance, if an employee moves to Sydney and works in the Sydney office they would need to set up a new payroll system to manage the payroll requirements of the different states. They need to re-register and pay for payroll tax.
Another key issue to be aware of is the tax residency, and if the individual remains an Australian tax resident. Usually, it is more tax effective to become a tax resident of the country they are moving to, mainly because their salary will be taxed only where they are working while, if they remain as an Australian tax resident, they must report their salary to the ATO and may be up for extra tax as a result.
Depending on your circumstances the ATO will make the decision of your Tax residency. The country you decide to reside in can also require tax obligations on you. This can result in a Double Tax Agreement (DTA), where both countries claim the person as a resident.
If you would like more information please speak to our Tax agent. Please email info@ax3.com.au or call 03 9995 7261
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