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zain93(Newbie)Newbie
2 Dec 2022

Hi,


Hope you are well.


Since remote work and accessibility of technology is enabling people to be able to work from anywhere for anyone.


Hence I just have a simple (yet slight complicated) question, if a person who is living in a country other than Australia i.e overseas and is not a permanent resident or a citizen. This person works for an Australian business and does work in the cloud. Does such a person need to pay income tax in Australia even though their pay will come to their account overseas? If yes, do they pay tax as a non-resident?

9,187 views
9 replies
9,187 views
9 replies

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Most helpful replyATO Certified Response

AnitaATO(Community Support)Community Support
ATO Certified Response5 Dec 2022

Hey @zainato93,


Usually, employers don't need to tax your income if you aren’t a resident here but work overseas for an Australian company. Your employer should work out if the income is what we call ‘foreign-sourced’. It's important they check with the relevant overseas tax department to see what their rules are.


If there is a tax treaty between Australia and another country this will say how to treat the income.


*updated by moderator 02/02/23*

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Most helpful replyATO Certified Response

AnitaATO(Community Support)Community Support
ATO Certified Response5 Dec 2022

Hey @zainato93,


Usually, employers don't need to tax your income if you aren’t a resident here but work overseas for an Australian company. Your employer should work out if the income is what we call ‘foreign-sourced’. It's important they check with the relevant overseas tax department to see what their rules are.


If there is a tax treaty between Australia and another country this will say how to treat the income.


*updated by moderator 02/02/23*

zain93(Newbie)Newbie
5 Dec 2022

Hi,


Thank you so much for your response! I am in Pakistan, would you happen to know any tax related things for that?


Additionally, if i receive pay in my Australian bank account. Does that change things? Or it has to be a Pakistani bank account?


Regards

CaroATO(Community Support)Community Support
16 Jan 2023

Hi @zainato93,


Our government Treasury website lists the countries Australia has a tax treaty with. Unfortunately, Pakistan isn't on the list.


The good news is, we won't tax you on the income that goes into your account. The Australian bank will withhold tax from interest you earn on the income as a foreign resident.


You can choose where your income is paid into.


Check out the information on our website where it talks about bank accounts held by foreign residents.

hvjn(I'm new)I'm new
9 Feb 2023

These employees can perform some work overseas and still be considered Australian-based. An Australian-based employee is also an employee who was engaged in Australia, is employed by an Australian employer, but performs their work overseas.

REGARDS : [removed by moderator]


JodieR_ATO(Community Support)Community Support
14 Feb 2023

Hi @hvjn,


The individual will need to determine their residency status first using our residency tests. If they remain an Australian resident for tax purposes and are only out of Australia for a short period, it's likely their income will be deemed Australian-sourced, and the employer will continue to withhold under PAYG and pay the employee SG.


However, if the individual is a foreign resident/non-resident and living and working overseas, it's likely the income will be deemed foreign-sourced, this is the case even if they have an Australian employer paying into their Australian bank account. Both the employer and employee may have reporting obligations and can check with the relevant taxing authority in the country where the work is being performed.


We've answered a similar post on our forum, you can view our response from here.

Peter_Clyne(Superuser)Superuser
18 Mar 2023

This simple Q&A is a common example which demonstrates how our tax legislation which was designed for the late 19th and early 20th century, is no longer fit-for-purpose in the 21st century.

Our taxing legislation and processes are way too outdated, and long overdue for complete overhaul.

jibrankhalid(Initiate)Initiate
22 Mar 2023

Only residents of Australia who will pay taxes other than Australia will not pay. Have a good day and enjoy working with the company that hired you. Can you tell me which freelance field are you working in? 🤔

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Do I pay taxes in Australia when I work remotely overseas for an Australian Business? | ATO Community