Tax implications for overseas workers

Posted on September 30, 2015 by admin

Australians who work overseas for an extended period of time should be wary of the tax implications that can arise from taking up such offshore opportunities. The tax residency status of an Australian who move overseas for employment plays a key role in determining how much tax that person is required to pay in Australia. Individuals who are “residents” of Australia for Australian tax purposes are taxed on both their Australian sourced and worldwide income. Individuals who are classified as “non-residents” are taxed only on their Australian-sourced income. Non-residential individuals are also ineligible for the $18,200 tax-free threshold, and therefore, all of their assessable income is taxed from the very first dollar. Foreign employment income is any income that an individual receives from working outside Australia. It includes any salary, wages, commissions, bonuses or allowances. For Australian tax residents, this foreign employment income is taxable in Australia and must be included in an Australian tax return. However, individuals who pay tax on that employment income overseas can claim the foreign tax as ‘credit’ against their Australian tax obligations. To make this claim, an individual must pay (or be believed to have paid) the foreign income tax, and the foreign income […]

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Salary sacrificing

Posted on September 27, 2015 by admin

While many employees can sacrifice salary in exchange for most work-related purchases, it is essential that employers are aware of FBT when working out the expense that will replace the income in a salary sacrifice arrangement. Employees should also be wary that if their employer has to pay FBT, that cost will most likely be passed on to them under a salary sacrifice arrangement. If an employee needs to purchase equipment for their work, they can work out a salary sacrifice with their boss to buy the equipment and reduce their personal tax bill if: the piece of equipment is considered to be ‘a tool of trade’ the piece of equipment is used primarily for work purposes the piece of equipment is the only tool received during the year with that function, and; if both the employee and employer have agreed to undertake the salary sacrifice arrangement beforehand. There are particular types of benefits an employer can provide to their employee that may trigger an FBT liability if provided under a salary sacrifice arrangement. These include cars, property and expense payments. However, there are certain fringe benefits that are specifically exempt from FBT under the law. These work-related FBT exemptions […]

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