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Re: Non Resident Witholding Tax for NZ based Australian Employee

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Hi

 

Wondering if I can get some advice from the experts in this community. I have searched for answers already, and although I have found some posts that partially resolve my situation, they do not answer all my questions.

 

I am an NZ citizen, and after several years in Australia, my family and I planning to move back to NZ (date yet to be determined). There is an opportunity that I may be able to continue my current employment and do my work remotely from NZ.

 

I have already researched the NZ side of things, and I know my tax obligations there if I was to keep my employment. From the NZ IRD side, NZ will treat my income as "New Zealand sourced", my Australian employer will be a non-resident employer (they have no offices or business dealings in NZ), and so I am an IR56 employee whereby I file / pay my own monthly taxes to the tax department.

 

The piece I am unsure of is the Australia side of things. From what I understand, if I remain an employee of the Australian company, when I become a non-resident, they will need to withhold non-resident tax each pay. So although New Zealand will treat the income as NZ sourced, so will the ATO in Australia.

 

It seems to me that the nett result of that will be that I am having non resident tax taken out of my monthy pay in Australia, before then calculating and paying tax on a monthly basis in NZ. Not looking for sympathy, but this would obviously be quite a heavy annual burden, and so I'm trying to see if my interpreatation is correct.

 

I know that Australia and NZ have a Double Tax Agreement, and as a result, I gather at the end of the year, I may be able to obtain a tax credit (from the ATO I guess?), on the fact that I have effectively been taxed in both countries. However, I am just trying to ascertain whether there are any means that I can be employed by my Australia employer (as an employee, not a contractor), not get taxed with non-resident tax, and pay my required NZ income tax to the IRD.

 

I thank you in advance for any comments, it is certainly appreciated.

 

 

 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Devotee

Replies 1

That non-resident withholding only applies to non-AU-tax residents working in Australia.

 

If you are a foreign resident (both physically and for tax purposes) and receive 'employment' income from an Australian company - that income should not have AU WHT or SG etc attached to it. The company paying you will need to be mindful of the NZ tax laws though.

3 REPLIES 3

Initiate

Replies 0

Just to clarify my question. I no way am I trying to circumvent the lawful tax process, I am just trying to determine if my understanding from the Australian tax side is correct, and whether there is any declaration form etc I can make to prevent having to initially pay tax in both countries.

Most helpful response

Devotee

Replies 1

That non-resident withholding only applies to non-AU-tax residents working in Australia.

 

If you are a foreign resident (both physically and for tax purposes) and receive 'employment' income from an Australian company - that income should not have AU WHT or SG etc attached to it. The company paying you will need to be mindful of the NZ tax laws though.

Initiate

Replies 0

Many thanks. That makes sense, I just couldn't find any references on the ATO site pointing me to any examples where if I was based overseas, but working for an Australian company, that the non resident withholding did not apply. Only a residency check that confirms I'll be a non resident. 

I'm sorted from the NZ side. With the current covid situation, NZ has identified that these sort of situations may become more frequency, and so now has a draft category of non resident employer, whereby because they don't have any other business in NZ (there are some specific definitions the acronyms of which have slipped my mind, but apply to my situation), they do not have tax obligations in NZ. Instead, with the NZ IR56 I essentially become the employer myself, and have to meet the relevant tax, healthcare (ACC) obligations for myself. 

Thanks again