Working in Australia - but being paid in £

[Kimorjack]

been offered the opportunity to continue to work (contract) for my current global company whilst i'm in Australia.

 

I have to go back with a proposal on how it could work.

 

Has anyone done this?

 

Was it an option to earn £ (sterling) rather than $ (dollars)

Working hours?

Tax implications

 

any advice would be welcome..

 

thanks

Kimorjack

[Rupert]

I cannot see why the currency you are being paid in should impact your working hours or your tax. The main issue is that your income and expenses are unmatched. Is this a short term arrangement?

[Kimorjack]

I cannot see why the currency you are being paid in should impact your working hours or your tax. The main issue is that your income and expenses are unmatched. Is this a short term arrangement?

 

Sorry - will give a bit more information.

 

I have a LTD company in the UK (IT Contractor) - so wasn't sure If I could continue to charge via my UK Ltd company or would I need to set something up in Australia?

 

With working hours - the work I do would mean I had to work as close as possible to UK working hours for part of the day - so was interested to see if anyone else had done this.

 

I expect this to be a short term arrangement - maybe 3 months.

[blossom]

I think you would need to talk to a tax expert on this one. Try Allan from go Matilda. You would certainly be taxed in oz, I'm just not sure how they would do it.

And remember, you still need a working visa to do work in oz, even if for a remote company paying into a uk bank account (you may know this, but others reading might not).

[Peach]

You would certainly be taxed in oz, I'm just not sure how they would do it.

 

Not if you paid the tax in the UK. Australia does not double tax you.

[LouDYorkie]

KimorJack, this is the same situation I may be in. I'd be interested what you find from this thread!

[Chortlepuss]

Also may be in the same situation. Key thing is length of residency - are you tax resident in UK or Oz (from memory 183 days resident in UK makes you tax resident). If tax resident in Oz (physically here) you will pay Australian tax but not be liable for UK tax. A good accountant is required I think!

Plus an appreciation of the £ against the $ will be helpful for you but as only 3 months not a big deal.

[VERYSTORMY]

The currency on it's own is not an issue. In my job I can often select what currency I am paid in. However, the tax issues are significant and need to be discussed with a professional. Again, I recommend Alan from Go Matilda.

[blossom]

Not if you paid the tax in the UK. Australia does not double tax you.

No, but there is a criteria on when you pay to which country, you can't just choose.

[Peach]

No, but there is a criteria on when you pay to which country, you can't just choose.

 

As the owner of the LTD company, the OP can choose to run his payroll in the UK (and in which case pay tax there) or set up a payroll in Australia (and in which case pay tax there).

[Petkula73]

Hi

 

I'll share my experiences with you, although I'm employed rather than owning a company. Don't think the basics are any different though.

 

 

I work for a global company and was initiall employed in the UK from 1998 onwards. In August 2011 I was asked to come out to Melbourne to manage a project for a period of three months. The company agreed to bring my family over with me, so we saw it as a change of scenery with a holiday at the end of it. At this stage I was paid in pounds from the UK and was ostensibly on an extended business trip.

 

In December 2011 I was asked if I wanted to stay on until April 2012. This is when we hit the first snag...

 

After 182 days in Australia, so early February 2012 for me, I became a "resident for tax purposes, which made all my earnings (in pounds) liable to Australian tax. Therefore, I was required to complete an Australian tax return for 2011/2012. Around the same time, we had to go cap in hand to the company and ask for some subsistance payments as my pretty decent UK salary was worth very little over here. We'd spent all our savings, so the company generously agreed to pay a stipend and backdate this to the date of entry (these were in the days of $1.4 to the pound).

 

I continued to be employed and paid from the UK and extended my time here further to July 2012 and then was asked if I wanted to transfer out here permanently in the same role. We agreed to this, and I went back to the UK for 3 months to sort out our affairs, then switched to the Australian payroll at the start of November.

 

The issues I have (and we have had to get one of the large accountancy firms in to sort this out) are:

 

1. From August 2011 to July 2012, then in October 2012 I was employed in the UK, earned pounds but lived in Australia. As such I was liable to pay Australian tax on all earnings. However, not everything was taxable, such as the stipend, which was classed as a living away from home allowance.

2. During this period I was not resident in the UK and could declare this on my tax return and claim back the UK tax paid in this period.

3. During the three months I was back in the UK in 2012 I was employed and paid in the UK, so had no Australian liability (although it was now my normal residence) and was liable to UK tax.

4. The UK tax year runs April to April, the Australian one runs July to June - therefore they are totally out of sync which makes claiming back tax hard as it's not in a like for like period

 

I've lost track of how many forms I have completed and how much hassle this has been. It's also cost a fortune in consultancy fees to the accountants. I have now claimed back the UK 2011-2012 money and am paying off the ATO for 2011-2012 in installments (interest free - so a good option).

 

I now have to work out how we account for the period from April to Nov 2012 and again claim back what I can and pay off what I owe.

 

To be honest it's a bloody nightmare. Would I have bothered if knew then what I know now? Yes, but only because Australia is worth the effort. If I was in the same situation in another country I would have come home at the end of the initial 182 days.

 

Hope this helps

[Rupert]

As the owner of the LTD company, the OP can choose to run his payroll in the UK (and in which case pay tax there) or set up a payroll in Australia (and in which case pay tax there). .

 

No you are wrong. OP can choose where to run payroll but cannot chose where to pay tax, the double taxation treaty will determine that and payroll systems do not come into it.

[Rupert]

Hi

 

I'll share my experiences with you as I was in the same boat...

 

I work for a global company and was initiall employed in the UK from 1998 onwards. In August 2011 I was asked to come out to Melbourne to manage a project for a period of three months. The company agreed to bring my family over with me, so we saw it as a change of scenery with a holiday at the end of it. At this stage I was paid in pounds from the UK and was ostensibly on an extended business trip.

 

In December 2011 I was asked if I wanted to stay on until April 2012. This is when we hit the first snag...

 

After 182 days in Australia, so early February 2012 for me, I became a "resident for tax purposes, which made all my earnings (in pounds) liable to Australian tax. Therefore, I was required to complete an Australian tax return for 2011/2012. Around the same time, we had to go cap in hand to the company and ask for some subsistance payments as my pretty decent UK salary was worth very little over here. We'd spent all our savings, so the company generously agreed to pay a stipend and backdate this to the date of entry (these were in the days of $1.4 to the pound).

 

I continued to be employed and paid from the UK and extended my time here further to July 2012 and then was asked if I wanted to transfer out here permanently in the same role. We agreed to this, and I went back to the UK for 3 months to sort out our affairs, then switched to the Australian payroll at the start of November.

 

The issues I have (and we have had to get one of the large accountancy firms in to sort this out) are:

 

1. From August 2011 to July 2012, then in October 2012 I was employed in the UK, earned pounds but lived in Australia. As such I was liable to pay Australian tax on all earnings. However, not everything was taxable, such as the stipend, which was classed as a living away from home allowance.

2. During this period I was not resident in the UK and could declare this on my tax return and claim back the UK tax paid in this period.

3. During the three months I was back in the UK in 2012 I was employed and paid in the UK, so had no Australian liability (although it was now my normal residence) and was liable to UK tax.

4. The UK tax year runs April to April, the Australian one runs July to June - therefore they are totally out of sync which makes claiming back tax hard as it's not in a like for like period

 

I've lost track of how many forms I have completed and how much hassle this has been. It's also cost a fortune in consultancy fees to the accountants. I have now claimed back the UK 2011-2012 money and am paying off the ATO for 2011-2012 in installments (interest free - so a good option).

 

I now have to work out how we account for the period from April to Nov 2012 and again claim back what I can and pay off what I owe.

 

To be honest it's a bloody nightmare. Would I have bothered if knew then what I know now? Yes, but only because Australia is worth the effort. If I was in the same situation in another country I would have come home at the end of the initial 182 days.

 

Hope this helps

 

It is a myth that you become resident after 182 days! It depends on your intentions above all else. Regardless of whether you are resident or not, if you are earning income from employment carried out whilst you are physically located in Australia then that income is taxable in Australia.

[Peach]

No you are wrong. OP can choose where to run payroll but cannot chose where to pay tax, the double taxation treaty will determine that and payroll systems do not come into it.

 

I beg to differ. In the example given: the UK company couldn't make payment (via UK payroll) to the OP without assessing and deducting the appropriate tax and NI. The total amount would go onto the OP's Australian tax return as part of his total income and the tax already paid would be deducted, to avoid double taxation.

[VERYSTORMY]

Ok, I work off shore. I have at numerous times been paid in a heap of different currencies and via companies based in everywhere from Oz to UK to offshore havens.

 

The resident rules have nothing to do with where pay role is done - unfortunately as otherwise I would have been tax exempt. It has nothing to do necessarily with where you work - there are specific guides as to if you are resident in Oz for tax or not.

 

It has nothing to do with how many days you spend in Oz. It used to, but this has been abolished. As some of you know it is one of my gripes with Oz. As i work off shore and could do the same job for the same company but live in the UK and be tax free.

 

The OP's case is fairly complex. I have not seen any answer on here that I would recommend relying on. He needs a good accountant that specializes in offshore working (very few do and the good ones are like gold dust).

[VERYSTORMY]

I beg to differ. In the example given: the UK company couldn't make payment (via UK payroll) to the OP without assessing and deducting the appropriate tax and NI. The total amount would go onto the OP's Australian tax return as part of his total income and the tax already paid would be deducted, to avoid double taxation.

 

But, he may be tax exempt in the UK as not resident for tax purposes. But regarded as resident in Oz for tax. So he may be able to escape any tax. Or be liable for the most expensive minus the deduction for dual tax. This is very complex. Ideally, he needs to find a way of being tax resident in neither.

[Peach]

But, he may be tax exempt in the UK as not resident for tax purposes. But regarded as resident in Oz for tax. So he may be able to escape any tax. Or be liable for the most expensive minus the deduction for dual tax. This is very complex. Ideally, he needs to find a way of being tax resident in neither.

 

I would assume that until he has been considered non-domiciled, by spending whatever the current threshold is overseas HMRC would expect their chunk first.

[VERYSTORMY]

I would assume that until he has been considered non-domiciled, by spending whatever the current threshold is overseas HMRC would expect their chunk first.

 

No. It is not as simple as that. The criteria the two countries use for tax residence is very different. The thresholds for UK tax may not apply depending on circumstances. When I have worked international from the UK, and most of my friends do so now, they need a specialist monitoring everything from travel to income to expenses monthly. But, the result is being tax zero. But it does need specialist advice.

 

For example, you can become non domiciled for tax immediately - while still effectively living in the UK and you can even carry it over!

[Somgirl]

Hi

 

I'll share my experiences with you, although I'm employed rather than owning a company. Don't think the basics are any different though.

 

 

I work for a global company and was initiall employed in the UK from 1998 onwards. In August 2011 I was asked to come out to Melbourne to manage a project for a period of three months. The company agreed to bring my family over with me, so we saw it as a change of scenery with a holiday at the end of it. At this stage I was paid in pounds from the UK and was ostensibly on an extended business trip.

 

In December 2011 I was asked if I wanted to stay on until April 2012. This is when we hit the first snag...

 

After 182 days in Australia, so early February 2012 for me, I became a "resident for tax purposes, which made all my earnings (in pounds) liable to Australian tax. Therefore, I was required to complete an Australian tax return for 2011/2012. Around the same time, we had to go cap in hand to the company and ask for some subsistance payments as my pretty decent UK salary was worth very little over here. We'd spent all our savings, so the company generously agreed to pay a stipend and backdate this to the date of entry (these were in the days of $1.4 to the pound).

 

I continued to be employed and paid from the UK and extended my time here further to July 2012 and then was asked if I wanted to transfer out here permanently in the same role. We agreed to this, and I went back to the UK for 3 months to sort out our affairs, then switched to the Australian payroll at the start of November.

 

The issues I have (and we have had to get one of the large accountancy firms in to sort this out) are:

 

1. From August 2011 to July 2012, then in October 2012 I was employed in the UK, earned pounds but lived in Australia. As such I was liable to pay Australian tax on all earnings. However, not everything was taxable, such as the stipend, which was classed as a living away from home allowance.

2. During this period I was not resident in the UK and could declare this on my tax return and claim back the UK tax paid in this period.

3. During the three months I was back in the UK in 2012 I was employed and paid in the UK, so had no Australian liability (although it was now my normal residence) and was liable to UK tax.

4. The UK tax year runs April to April, the Australian one runs July to June - therefore they are totally out of sync which makes claiming back tax hard as it's not in a like for like period

 

I've lost track of how many forms I have completed and how much hassle this has been. It's also cost a fortune in consultancy fees to the accountants. I have now claimed back the UK 2011-2012 money and am paying off the ATO for 2011-2012 in installments (interest free - so a good option).

 

I now have to work out how we account for the period from April to Nov 2012 and again claim back what I can and pay off what I owe.

 

To be honest it's a bloody nightmare. Would I have bothered if knew then what I know now? Yes, but only because Australia is worth the effort. If I was in the same situation in another country I would have come home at the end of the initial 182 days.

 

Hope this helps

 

we were in a similar situation to you (but maybe not quite so complicated) we left it in the hands of PwC!

[Kimorjack]

Wow! this is what I love about this forum.

 

Great input - will take this onboard - and it seems there's a few of us in the "same boat".

 

Bottom line is that I want to do the right thing thats not going to compromise me in the future - eg. get bitten by an UK or Oz Tax system (or even worse... both!).

 

I have an UK based accountant - but he doesnt specialize in this area - but he is looking at a strategy - so will update everyone - but with a caveat that we all have different scenario's.

 

Has anyone been able to be a Non-Tax Payer in both country's? Is that even possible? I think these are the questions for a specialist.

[blossom]

Lol. In the end it's a bloomin complicated situation. That's why the experts charge lots of money.

[Petkula73]

It is a myth that you become resident after 182 days! It depends on your intentions above all else. Regardless of whether you are resident or not, if you are earning income from employment carried out whilst you are physically located in Australia then that income is taxable in Australia.

 

Not according to Ernst and Young it isn't. I trust they know what they're talking about!

 

If you are here for fewer than 182 days your tax liability in Australia is ZERO, provided your income is taxed in a country with a bilateral tax agreement such as the UK.