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AJ_Bull(Initiate)Initiate
20 Aug 2024

Hi there,


I am a New Zealander permanently residing in Indonesia and working remotely as a consultant. I have recently been engaged by an Australian company and I am enquiring as to what my AU tax obligations are. The specifics of my situation are detailed below:


  • I am a New Zealand citizen
  • I am based permanently in Indonesia
  • My business is based in Indonesia
  • I pay taxes in Indonesia
  • I have no business in Australia
  • I do not live in or visit Australia
  • I have been hired as an independent contractor by an Australian company
  • I will complete all work for this company remotely from Indonesia


Are you able to advise what my tax obligations in Australia will be?


Thanks

1,454 views
5 replies
1,454 views
5 replies

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Most helpful reply

AnitaATO(Community Support)Community Support
26 Aug 2024

Hi @AJ_Bull,


You won't necessarily have any tax implications here in Australia if you're not in Australia doing the work. here you perform the work can indicate the source of income. As a non-resident you'd only report Australian-sourced income. This can be confusing because you're contracting to an Australian company. But like I mentioned you're not here performing the work for them.


Being a tax resident of Indonesia then it's likely your income is only reportable there. You'll need to check that with the local government department in Indonesia.


If you're in Australia performing the work, then you'd need to check if you were entitled to an ABN. Check out our article about what remove working means.

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Most helpful reply

AnitaATO(Community Support)Community Support
26 Aug 2024

Hi @AJ_Bull,


You won't necessarily have any tax implications here in Australia if you're not in Australia doing the work. here you perform the work can indicate the source of income. As a non-resident you'd only report Australian-sourced income. This can be confusing because you're contracting to an Australian company. But like I mentioned you're not here performing the work for them.


Being a tax resident of Indonesia then it's likely your income is only reportable there. You'll need to check that with the local government department in Indonesia.


If you're in Australia performing the work, then you'd need to check if you were entitled to an ABN. Check out our article about what remove working means.

AJ_Bull(Initiate)Initiate
29 Aug 2024

Hi @AnitaATO,


Thanks for that!


I have follow-up questions, asking on behalf of my client this time:


  1. How do they claim my invoices as business expenses if I, as an overseas contractor, do not have an ABN?
  2. Will payments to overseas bank accounts red flag their company in any way?





SimarATO(Community Support)Community Support
3 Sept 2024

Hi @AJ_Bull,

 

  • How do they claim my invoices as business expenses if I, as an overseas contractor, do not have an ABN?

 

Contractors can be located outside Australia and may not have an ABN. There is no exclusion based on the location or tax residency of the contractor (payee). If an ABN isn't provided, you may need to withhold payment under the pay as you go (PAYG) withholding arrangements.

Find out more info on how do I report payments made to contractors here. But if you consider registering for an ABN as a foreign contractor, which might simplify the process and reduce withholding tax.

 

  • Will payments to overseas bank accounts red flag their company in any way?

 

As long as they're meeting their reporting obligations and maintaining proper records, this shouldn't "red flag" their company. 

AJ_Bull(Initiate)Initiate
4 Sept 2024

@SimarATO,


OK, so another follow-up question:


I happen to have an ABN, as I lived and worked in Australia for five years, albeit 15 years ago now.


If I submitted invoices using my ABN, my client could claim these invoices as business expenses and wouldn't have to withhold PAYG, is that correct?


Would there be any implications to doing this come the end of the tax year?



Matt_ATO(Community Support)Community Support
5 Sept 2024

Howdy @AJ_Bull,


If you submit invoices using your ABN, your client can indeed claim these invoices as business expenses. They wouldn’t need to withhold PAYG tax from your payments, as long as your ABN is quoted on the invoice.


You will need to report the income from these invoices in your tax return. This includes paying any applicable income tax and GST if you are registered for GST.

Ensure you keep detailed records of all transactions:,

  • including invoices and
  • payments.

To accurately report your income and claim any deductions.


Since your ABN is quite old, you might want to check if it is still active. You can do this through the Australian Business Register.

If you are no longer a resident of Australia, there might be additional tax implications, such as different tax rates or obligations under international tax treaties.

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