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Guest kevbetts

Working for british company whilst living in australia

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Guest kevbetts

Hi, i wonder if anyone can advise me on the situation that has arisen. I will be arriving in Perth in December on my de-facto visa to start my new life in the sunshine, my current employer has offered me the chance to stay employed and work from Perth for them on offshore projects in Australian waters.

 

The question is: when i receive my wage should i be paying tax on it in the UK or will i have to pay tax in Australia?

 

Anyone in the same position or has knowledge of the tax system advice would be much appreciated.

 

Thanks

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Hi

 

I can't help you on the tax thing... I would guess no tax to pay as you aren't resident in the UK which is the base of the company you're working for but that could be wishful thinking!!!

 

I just wanted to say 'lucky you!' Well done on securing a job though and good luck on your ventures!

 

Cx

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i would think you will pay tax in australia, my hubby worked for a german company in singapore [ tax paid in singapore ] then they moved him to sydney to work in australia and off shore and tax was paid here

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Guest nm123

It will depend how long you are out of the UK for and how long you are in Australia for? If you only go for a year, then you won't break tax residency in the UK and will also become tax resident in Australia. If you are out of the UK for an entire UK tax year, you will be seen as non-resident from the day you leave.

 

As for how your employer treats your tax position whilst you're away - you'd need to ask them. You should be getting some kind of formal international assignment or secondment to do this (this is what I do for a living for a big UK company). If you don't there are corporate tax risks for your employer and tax exposure for yourself too.

 

Will you keep a UK salary? A UK contract? or will you transfer to the Australian entity and be employed by them and receive a AUD salary?

 

Some companies use a form of tax equalisation when people go on assignment. Essentially, it means that you still pay the same rate of tax as you would had you stayed at home. The employer deducts this hypothetical tax from your salary each month, so your net pay should look as it does normally. This hypothetical tax is then used to pay tax in the home or host country (wherever it is due) and the company pays any additional cost (if you move to a higher tax country) or keeps the difference (if you move to a lower tax country).

 

Hope that helps?!?!? Let me know if you need more info, or guidance on what kind of questions you should be asking your employer.

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Guest cheney

Yes you will have to pay tax here. If you are paying UK tax on the job too you have that tax paid as credits (tax offsets) to include in your return.

Kind regards

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My hubby is in a similar situation - he works for an American company but is based in Australia. You need to work out how they will pay you. When he was first offered the position he asked for his salary to be set in Australian dollars. It has turned out to be a VERY wise move with the way the currency market has gone recently.

 

He effectively contracts to the American company, and pays tax etc here.

 

Love

 

Rudi


 

 

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Guest kevbetts

thanks for all this advice, i will have to look into the gettin paid in AUD or pounds to see what will work out best, end of the day i wont be tax free which i was hoping there may have been a slim chance but at least i konw where i stand now.

 

Cheers everyone!

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Guest HopeAddict

I am in a similar position. I am negotiating a contract with my UK employer to work for 3/4 months remotely from Sydney. I'll be moving to Sydney permanently so will become resident in Australia on arrival and will become non resident in UK from the day after leaving the UK. I understand that as a non resident, I will only be liable to UK tax on UK source income.

 

I am not sure though whether the income I receive from my UK employer will be deemed as UK source income. They do not have a branch in Australia so I would be the only 'employee'. Any advise would be much appreciated as I think my employer knows just about as much as me!

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Guest nm123
I am in a similar position. I am negotiating a contract with my UK employer to work for 3/4 months remotely from Sydney. I'll be moving to Sydney permanently so will become resident in Australia on arrival and will become non resident in UK from the day after leaving the UK. I understand that as a non resident, I will only be liable to UK tax on UK source income.

 

I am not sure though whether the income I receive from my UK employer will be deemed as UK source income. They do not have a branch in Australia so I would be the only 'employee'. Any advise would be much appreciated as I think my employer knows just about as much as me!

 

 

You need to do two things:

 

  1. Get a tax advisor who specialises in international taxation.

  2. Get your employer to get a tax advisor who specialises in international taxation and ask the advisor if the company is at risk of creating a Permanent Establishment? (if the answer is yes, it could be VERY expensive for them)

 

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hi

 

i have just came out of this exact situation! My employer transfered my location of work form UK to Melbourne and the most cost effective way for both was to transfer my contract to an australian and pay me in AUD. Just make sure you negotiate the correct salary and benefits package inline with the best exchange rate.

 

You do not need to pay double tax, something you would have to do if paid in GBP but work in Oz, not to mention the charges to transfer your money across every month.

 

As someone mention, your companies view may be different if they do not already have a Permanent Residency in Australia, it wouldnt be cost effectiv efor them to then transfer you to an Oz contract.

 

let me know if you have any questions and i'll see if i can help.

 

E

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The simplest way for your UK employer would be to end your employment when you leave the UK and take you on as a contractor/supplier in Aus. That means you would invoice them (at whatever rate and in whatever currency you've negotiated) and they would pay your invoice.

 

That won't necessarily be simplest for you as you'd then be self-employed in Australia and responsible for payment of tax and all that that entails (so bear the cost of that in mind when negotiating the fee and remember to include the employer's NI your firm was paying when you were in the UK).

 

The one thing you don't need to worry about is "UK sourced income". You are working in Australia and so are being paid for work done in Australia. So your pay is always going to be Australian sourced income no matter where your employer's office is.


Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia)

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Guest HopeAddict

Many thanks for all your replies.

 

Ken, I totally agree about the UK source income issue. I managed to get to the bottom of it after a bit of research and found that the source of income is based upon the geographical location of where the work duties are performed, not the geographical location of the company the duties are being performed for.

 

The contractor route is one that I have been thinking about over the last week and have suggested to my employer. It seems to me to be the simplest route from the perspective of my employer in that they do not then need to worry about any taxation issues. I am happy to take ownership of the payment of tax, it is not complex and as everyone has to complete a tax return annually in Australia anyway, it doesn't make a huge difference other than cash management between receiving payment and paying the tax.

 

I guess an issue that crosses my mind with going the contractor route is that it may possibly create issues with the Australian Tax Office. I know that IR35 in the UK looks at the nature of a contract to deem whether it is in fact self employment or whether the worker is actually an employee. I'm not sure if the ATO look at contracts in a similar way, and if they conculded I was actually an employee, what consequences that would have for both myself and my UK employer?

 

Also, I'm not currently sure whether my company would require that I trade via a Ltd company / Umbrella entity, so I need to determine this as that may add complexity.

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Many thanks for all your replies.

 

Ken, I totally agree about the UK source income issue. I managed to get to the bottom of it after a bit of research and found that the source of income is based upon the geographical location of where the work duties are performed, not the geographical location of the company the duties are being performed for.

 

The contractor route is one that I have been thinking about over the last week and have suggested to my employer. It seems to me to be the simplest route from the perspective of my employer in that they do not then need to worry about any taxation issues. I am happy to take ownership of the payment of tax, it is not complex and as everyone has to complete a tax return annually in Australia anyway, it doesn't make a huge difference other than cash management between receiving payment and paying the tax.

 

I guess an issue that crosses my mind with going the contractor route is that it may possibly create issues with the Australian Tax Office. I know that IR35 in the UK looks at the nature of a contract to deem whether it is in fact self employment or whether the worker is actually an employee. I'm not sure if the ATO look at contracts in a similar way, and if they conculded I was actually an employee, what consequences that would have for both myself and my UK employer?

 

Also, I'm not currently sure whether my company would require that I trade via a Ltd company / Umbrella entity, so I need to determine this as that may add complexity.

 

Have you found out any further info on this re: Ltd companies do you or anyone know how that works in Oz? My hubby at present works on a contract basis which could continue when we emigrate. Do they gave the same Ltd company options in Oz or is it just self employment and would it be better to get paid in Oz dollars in this instance? Also does anyone know what happens with Super?

Many thanks for any help!!

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Make sure you transfer your UK holiday allocation (or negotiate the difference). Holiday allocation for Australia is typically 20 days PA - In UK I was on 30, like many professional positions - you need some compensation for this if you are going to drop!

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