taxes exceed your home country liability, no tax refund may be obtained.
You will need
to seek specialist tax advice from an Australian accountant or tax lawyer
as regards any need to submit a formal claim for relief under the particular
Double Tax Treaty concerned. Apart from the 183 day rule, the other
criteria for obtaining relief are usually that you are paid by a non-Australian
company and that the costs of your employment are borne by a non-Australian
company. You should not, generally, have a problem satisfying these criteria.
are paid by an Australian company or by a non-resident company from a base
in Australia, pay-as-you-go (PAYG) tax instalments must be withheld.
PAYG tax must also be withheld from payments to contractors
in an Australian Business Number (ABN) is not provided by the contractor
and the payment amount, disregarding Goods & Services Tax (GST), exceeds
A$50. You should contact an accountant or tax lawyer in Australia to
discuss the obligations and practicalities of your limited company making
and remitting Australian payroll deductions. It may be that using
an Australian payroll bureau will be the most straight-forward way of meeting
any obligations you may have as an employer.
– International Aspects
As an employee
of a non-Australian limited company seconded to Australia, depending
upon the country of tax residence of your company and, perhaps, your own
nationality, it may be possible for you to remain within your home country
social security scheme for a limited period. This will be the case
if Australia has a Totalisation Agreement covering social security contributions
with the country of your employer or, in some cases, the country of your
nationality. You will need to seek specific advice from an Australian
accountant or tax lawyer to establish whether there is a relevant agreement
that can apply to you, especially since new agreements are being made on
an ongoing basis.
Totalisation Agreement will cover the contributions of both employer and
employee. It will be necessary for you to apply for a ‘Certificate
of Coverage’ from the organisation dealing with social security in your
home country. In making the application, you will probably require
assistance from a tax adviser in the country of tax residence of your company,
who happens to specialise in expatriate matters. Obtaining the Certificate
will enable you (as employer and employee) to continue to pay into
your home social security scheme and thereby protect your entitlement,
as an individual, to social security benefits, particularly pensions.
At the same time, you would normally apply for a certificate to cover
you for publicly-available health care in Australia.
If your home
country contributions are higher than in Australia, e.g., as in France,
it could be that you would prefer to pay social security in Australia instead.
In this case, you would not make an application for a certificate to keep
you in your home country scheme but would withhold Australian Medicare
and Superannuation contributions together with the tax withholding.
In the case
of the UK and Australia, there is no Totalisation Agreement that covers
contributions, only one that covers benefits. Because of this,
an employee seconded to Australia and their employer have to remain in
their home scheme for a 52 week period and are exempt from making contributions
into the Australian during this period. From the 53rd week, UK contributions
cease and Australian contributions commence.
will only be subject to Australian corporation tax if it has a permanent
establishment in Australia. Whilst this is generally an office or
branch, a permanent establishment can also be deemed to exist if the actual
operations take place in Australia. To avoid this deeming provision,
you should draw up and sign contracts outside of Australia and also avoid
having Australian letterhead, business cards, name plate etc. Aside
from the fact that Australian corporation tax may be more than in your
home country, there are a number of other obligations you would have to
meet as an Australian company and you would wish to avoid these if at all
Tax Rates and Allowances
rates and allowances generally change on a tax year (ending 30 June)
basis, it is best to obtain specific advice from an Australian accountant
or tax lawyer at the appropriate time. This also affects the availability
of business and non-business deductions, tax credits and allowances, which
may be more or less generous than what you have been used to. There
are no state or city taxes due in Australia.
are fairly high in Australia in comparison with the US, the UK and
Germany with the marginal rate, on income above $60,000, being 47% for
the year ending 30 June 2002 for both residents and non-residents. There
are no social security contributions as such but there is a 1.5% levy
on taxable income for residents only to cover the funding of a National
Health Scheme plus a surcharge of 1% for high income taxpayers not
covered by private health insurance. Employers and self-employed
individuals also have to contribute to complying superannuation entities
and retirement savings accounts at a rate of at least 8% (for the year
ending 30 June 2002) of their payroll and specialist advice should be sought
in this respect.
On 15 October
2001, the Australian federal government announced that from 1 July 2002
it would enhance the tax exemption for certain foreign-source income
of expatriates resident in Australia for less than four years. These
enhancements include an exemption for their foreign-source income from
assets, regardless of when acquired, and for interest withholding tax on
interest payments for liabilities, regardless of when incurred. This
could provide a major tax planning mechanism as far as the dividends from
your non-Australian limited company are concerned, especially if you do
not remain a tax resident of any other country or are assessable on the
remittance basis only.
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