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foreign resident employed by Australian business

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Newbie

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Hi,

I have a question regarding an Australian business employing a foreign resident. More specifically, a person that is currently a permanent resident of Australia decides to reside overseas (Germany) for an unspecified amount of time. This person might be classified as a foreign resident for tax purposes.

What are the tax implication for the business employing that person? Will the business have to pay a higher payG tax if the employee is not a resident for tax purposes?

Can the employee retain their residency for tax purposes, e.g. if they get their salary paid in an Australian bank account etc?

Does it make a difference if the employee is a permanent resident or a citizen?

 

Any help and referal to further information sources on cases like this is greatly appeciated.

 

1 ACCEPTED SOLUTION

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Best answer

Community Manager

Replies 0

 Hi @MCK,

 

The employer will tax you differently but there are no extra charges etc for them.

 

Thanks

 

KylieS

 

 

 

3 REPLIES 3
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Enthusiast

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@MCK 

 

What are the tax implication for the business employing that person? Will the business have to pay a higher payG tax if the employee is not a resident for tax purposes? Foreign resident tax rates to be used in witholding that PAYGW amount.

https://www.ato.gov.au/Rates/Fortnightly-tax-table/?page=7#When_your_employee_is_a_foreign_resident 

Can the employee retain their residency for tax purposes, e.g. if they get their salary paid in an Australian bank account etc? I don't think so.

Reside test

  • physical presence : No
  • intention and purpose : No
  • family : probably No?
  • business or employment ties : Yes
  • maintenance and location of assets : Yes if the employee still has property and Bank accounts in Australia. 
  • social and living arrangements. probably No? 

If you don't satisfy the 'resides test', you'll still be considered an Australian resident if you satisfy one of three statutory tests.

1. Domicile test No

2. 183 day test No

3. Commonwealth Superannuation test No

 

Does it make a difference if the employee is a permanent resident or a citizen? No difference in my opinion. 

https://www.ato.gov.au/Individuals/international-tax-for-individuals/work-out-your-tax-residency/ (For more info)

 

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Newbie

Replies 1

Thank you for your answer.

 

I did read through all the information available at ATO's website and came to the same conclusion that I will be a foreign resident for tax purposes.

 

I wanted to find out if my employer (an australian business) would have to pay extra fees or taxes if it employes me as a foreign resident as opposed to a resident.

 

I understand that my salary will be taxed differently, but I could find no information regarding the implications for the employer.

 

Highlighted

Best answer

Community Manager

Replies 0

 Hi @MCK,

 

The employer will tax you differently but there are no extra charges etc for them.

 

Thanks

 

KylieS