# Working for Foreign Employer



## nimalan

I got the PR and will be moving to Melbourne in April 2015. 

My current employer in my home country is willing to offer me a consultant job on a renewable contract basis. Remuneration will be defined in AUD. They do not have an office in Australia and therefore I need to work from home. They will not make superannuation or any other contributions. I have couple of concerns

1. What is the requirement for foreign employers regarding superannuation contribution? 

2. Will my employment as a consultant to a foreign employer be considered as Australian experience when I apply for jobs in the future?

Thank you in advance for your valuable feedback.


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## Engaus

Are they paying you into your Australian bank account? How do you plan on paying tax?

If you are working remotely for an overseas country it won't be considered local experience - which is generally what most employers want to see.

Do you know how much in AUD they plan on paying you? I ask only because you want to make sure it's competitive and that you can survive on that wage. Australia is VERY expensive.


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## nimalan

Engaus said:


> Are they paying you into your Australian bank account? How do you plan on paying tax?
> 
> If you are working remotely for an overseas country it won't be considered local experience - which is generally what most employers want to see.
> 
> Do you know how much in AUD they plan on paying you? I ask only because you want to make sure it's competitive and that you can survive on that wage. Australia is VERY expensive.


Thank you for the feedback. The offer is not yet finalized but they mentioned that the offer will be all inclusive and I need take care of tax etc. They will remit my australian bank account.

Since this will not be considered as local experience and there will not be superannuation as well, I guess I should consider whether to accept this offer or not. Do you think $5,000/month is sufficient for a family with 2 young children?
Good thing about the offer though that I will have employment from day 1 itself and since I can work from home, my wife too can look out for a part/full time employment.

Thanks.


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## Engaus

What your employer is planning to do doesn't sound right to me. I was being paid by an overseas employer too - but they still took out tax and paid me superannuation - as it's illegal not to in Australia.

If you are making $5,000 a month AFTER tax and superannuation is taken out then I would say that's sufficient if your wife can also get a job. 

If it's just you working and/or that $5,000.00 is before you have paid tax and super then you will struggle, especially if you plan on living near a city.


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## Mish

What they are doing sounds ILLEGAL.

You MUST pay tax if you are working in Australia! 

Majority of the time the employer will have an ABN and you provide them with your TFN and they take care the rest.

If you try to avoid paying tax it will catch up with you one day and apart from paying the tax you should have paid you will probably also have to pay a fine.


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## nimalan

Mish said:


> What they are doing sounds ILLEGAL.
> 
> You MUST pay tax if you are working in Australia!
> 
> Majority of the time the employer will have an ABN and you provide them with your TFN and they take care the rest.
> 
> If you try to avoid paying tax it will catch up with you one day and apart from paying the tax you should have paid you will probably also have to pay a fine.


Thank you for the feedback and looks like I was not clear enough. The employer will make a regular payment and I will be paying the tax for that income. I am not trying to evade paying the tax. Should an overseas employer pay superannuation? If so, how can this be done as they are not a registered company in Australia.

Another option which my employer suggested was for me to get a TFN and ABN and they will sign a service agreement with me for me to provide consultancy service to them. But my concern is whether I could easily get a housing loan with a service contract, compared to an employment contract.


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## Mish

nimalan said:


> Thank you for the feedback and looks like I was not clear enough. The employer will make a regular payment and I will be paying the tax for that income. I am not trying to evade paying the tax. Should an overseas employer pay superannuation? If so, how can this be done as they are not a registered company in Australia.
> 
> Another option which my employer suggested was for me to get a TFN and ABN and they will sign a service agreement with me for me to provide consultancy service to them. But my concern is whether I could easily get a housing loan with a service contract, compared to an employment contract.


How are they going to pay your tax if they are not registered in Australia? In order to pay your tax they need an ABN and need to register as a PAYG withholder.

Also getting an ABN has many requirements so you will need to make sure you are entitled to it, it is not as simple as "I want an ABN". One requirement that I do remember of an ABN is that no more than 80% work can be done for one employer.

Self employed people struggle to get loans as they try to minimise the amount of tax they pay through deductions then when we comes to apply for the loan the bank thinks they are not earning as much as they really are.

Sorry I am not sure about foreign companies and super but I would think if you are working in Australia you arr required to have super paid. Just remember super is only compulsory for those with a TFN.


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## rani

The 80% rule is right for the ABN. An ABN is used for a business or a person to set up their own business. So as a consultant you should be consulting for many companies not just one. If you are getting your sole business from just one company or more than 80% than you really are an employer so they should pay tax and super. 

This is a sneaky way for employers to avoid their responsibilities of paying their employees tax, superannuation and other benefits and in my experience if you did this they would probably somewhere along the line ask you to sign something that says you are not working more than 80% for them (even if you are) and then if you are caught all the responsibility and (fines) ? would probably fall on you. 

I'm also not sure you could get a home loan with just a service contract usually you would need to have a reasonable deposit of 10-20% of the purchase price plus legal costs and the bank also may like to see your last two years tax returns or income summaries.


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## Mish

rani said:


> This is a sneaky way for employers to avoid their responsibilities of paying their employees tax, superannuation and other benefits and in my experience if you did this they would probably somewhere along the line ask you to sign something that says you are not working more than 80% for them (even if you are) and then if you are caught all the responsibility and (fines) ? would probably fall on you.


I was researching ABN's for a friend's husband recently and from what I found out if you apply for an ABN when you are not suppose to the fine falls on the person who applied for the ABN because they are the ones who supplied the information to get an ABN and they provided false information. The website said up to a $10,200 fine. I suspect that would be morey to pay as well.

I agree with you though it is a way for employers not to pay super, sick leave, holiday leave etc. Apparently it is quite common in the building industry for employers to say "must have ABN".

OP: there is an ABN entitlement tool on the ATO website which will tell you if you are entitled to one.


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## rani

Well there you go lol I was not sure about how much the fines were.. you come up against people in the contract cleaning industry all the time! It's best just to steer clear of people who just don't want to do the right thing. And sadly most of the time I have found its people taking advantage of member of their own community who don't know any better.


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## nimalan

rani said:


> Well there you go lol I was not sure about how much the fines were.. you come up against people in the contract cleaning industry all the time! It's best just to steer clear of people who just don't want to do the right thing. And sadly most of the time I have found its people taking advantage of member of their own community who don't know any better.


Dear All,

Thank you for your valuable insight, which really made me to rethink about this offer.

Just for my understanding, is it the responsibility of the employer or the employee to pay the income tax?. In Sri Lanka, the employer is to deduct the tax from the employee and the employer defines the salary as gross (before any deductions). Therefore it is the employee who ends up paying the tax. Even if the employer does not deduct the tax, the employee will be held responsible and pay the taxes and any fines.

This is the same thing my current employer is trying to offer, where they would define the salary as gross and it would be my responsibility pay any taxes for my income. Will this arrangement violate the Australian regulations?

I would really appreciate if someone could shed some light on how a foreign employer could contribute superannuation. I am sure there will be someone who is/was working for a foreign company which does/did not have ABN.

Is there any other way to go ahead with this offer without violating any regulations? One could be to get the company to register them in Australia but I am not sure whether they will be willing to do that. Aren't there other foreign companies who are getting consultancy services from Australians on a full time basis for a predefined period?

Thanks.


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## rani

Hi nimalan 
I'm really not qualified to answer your questions I'm sure there must be someone/companies doing consultancy in Australia but whether people here would have the right type of knowledge to help you I don't know.

This tool can help the company work out whether you should be considered an employee or a contractor 
https://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/
But from your point of view I would still be concerned about the 80% rule.

You could try contacting the Australian Taxation Office because if they can't help you they may at least be able to point you in the right direction


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## Mish

I would be talking to a registered accountant and getting some rules from them. They are more qualified to help. Honestly the people on people desks probably aren't going to be able to give you the information you need. Usually call centres just give you basic information. .

I would also be getting a registered accountant to do your taxes it sounds complex and messy.

Please let us know what you find out though. I would be interested to know.


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