Running a business is tricky at tax time when you depend on any overseas services. It can be a minefield trying to do the right thing by the ATO and by your employees. We’ve put together a few pointers to help you but it’s always best to book an appointment with your closest ITP Qld office if you’re not sure.
So if you are conducting business overseas and don’t know whether it should be reported to the ATO or the country in which business was conducted look into testing yourself against the criteria.
1. Under this test, when someone is overseas for more than 183 days they may be classed as a non-resident for Australian income tax purposes.
2. An even better test is called the domicile test. This test is based on the facts of each case and is designed to assess where a person normally resides.
3. For employees that are residents of other countries, because they will not be working for you in Australia, they will only pay tax to the country that they are regarded as being a tax resident of.
4. As to whether income tax will be payable on the income your business is earning, or the wages paid to your employees, will depend on the tax laws of each of the countries where these services are provided.
5. If you’re under the aforementioned 183 day mark you can also claim your travel expenses as tax deductible.
If you’re unsure of what to class your employees as, it’s best to visit your nearest ITP Qld office. They can help you make sense of it all, and the fee is tax deductible for the following year too.