“Inbound” Assignees – Example
Perhaps you are an HR manager (based anywhere in the world) and you need to send a UK employee to Australia for a few months to work on an important project. What do you do and whom do you call ? Here is your scenario :
- A UK company sends a UK engineer to Perth WA for 3 months (less than 183 days).
- She is paid by the UK into her UK bank account and suffers UK PAYE withholding and UK NIC social security. Her salary is recharged to Australia under your group’s “transfer pricing” policy.
- She is UK tax resident and is non-resident of Australia for tax purposes.
Here are some of the questions you need to ask :
- Question 1 : Is her salary for these 3 months (plus her bonus, share options and fringe benefits) taxable in Australia ?
- Question 2 : What about Australian PAYG withholding, Fringe Benefits Tax (“FBT”), Super Guarantee and WA Payroll Tax ? What about UK PAYE withholding and UK income tax on her fringe benefits ?
- Question 3 : Does she need to lodge an Australian tax return ?
- Question 4 : Does her Australian visa type make a difference to her Australian tax position (e.g. if she is on the common “457” work visa or rotating in on the new Subclass 400 short-stay temporary work visa) ?
- Question 5 : Does Australia apply the “economic employer” concept under Article 15 of the UK-Australia DTA or tax treaty ? If so, who is her “employer” for tax treaty exemption purposes ?
- Question 6 : What if we don’t recharge her salary to Australia – will her salary be exempt from Australian tax ?
- Question 7 : Does she constitute a Permanent Establishment (“PE”) or Australian branch of the UK company ?
The Answer : it’s not just about passing a 183-day tax rule … Talk to us. And get the right answer at the right time.