“Outbound” Assignees – Example
Or perhaps you are a Finance Director of an Australian company and you need to send an employee from Perth WA to work at your Malaysian client’s site for 12 months as a one-off project. You know the worker will be both Australian tax resident and Malaysian tax resident while he is living and working in Malaysia – but will this “dual resident” have double taxation ? You also have to keep your assignee happy with his assignment remuneration package, yet stay within your budget (as your client has agreed a fixed fee that cannot be increased). You need someone who will work alongside your Malaysian tax advisors. And, of course, you need a rapid turnaround – you need the correct tax answers by 4 pm today. You can’t wait two weeks for tax advice. Who are you going to call ?
Here are some of the questions we will help you with :
- How do you structure your employee’s assignment so your company has no Malaysian “PE” or branch and so it has no Malaysian WHT on the fees it earns ?
- Who should employ your assignee – Australia or Malaysia ? And what are the consequences of your choice ?
- What Malaysian and Australian tax will arise on his Malaysian accommodation, car, medical insurance and private school fees ? And who pays this tax ?
- What about Australia’s “LAFHA” (“Living Away From Home Allowance”) rules if he rents out his Perth home for 12 months ? Or can you pay him a per diem ? Will Australia tax your company to Fringe Benefits Tax (“FBT” – which is an effective rate of around 87%) on the value of his $50,000 pa Kuala Lumpur accommodation that you are providing ?
- Will there be any Australian income tax, PAYG withholding, FBT, WA Payroll Tax or Super Guarantee on his remuneration ?
- Is there any Malaysian tax, wage withholding or social security on his salary and fringe benefits ?
- Will there be any Malaysian corporate tax, withholding tax or VAT/GST on the company’s profits ?
We will work with your foreign tax advisors if you want and we will help your assignee see the benefits you are providing them with. Your assignee will often talk with us more easily than with you as we are external and independent. By providing them with a personal Australian tax meeting (an “Australian tax departure meeting” for outbounds and an “Australian tax arrival meeting” for inbounds), we can answer all of their tax questions and help reduce your HR issues. And we can prepare and lodge their personal tax returns in both countries. If your assignee is happy, your work becomes much easier.