What to do when employing a person on a holiday working visa
From 1 January 2017, employees on working holiday visas (e.g. Subclass 417 or 462 visas) are taxed at a flat rate of 15% on earnings up to $37,000 with ordinary marginal rates of tax applying after $37,000.
There is no $18,200 tax-free threshold for such working holiday visa holders / backpackers regardless of their residency status (i.e. in contrast, tax resident individuals that are not working holiday makers will qualify for the tax-free threshold) and if such taxpayers do not provide their tax file number (TFN) to employers, employers must withhold tax at the top marginal rate (i.e. 45%).
An employer should only employ such holiday workers that have the correct visas to undertake gainful employment in Australia and also register as an employer of working holiday makers.
An employer that fails to register will be subject to penalties and will also have to withhold tax at 32.5% from each dollar earned up to $87,000.
Issues to think about when expanding your business overseas
Many businesses are growing and are looking at opportunities to expand to overseas markets.
There is no “one size fits all” solution for planning and structuring international business expansion. Tailored analysis is required for all the commercial and tax aspects of the expansion. All potential risks must be managed. These issues are not simple matters.
Some initial issues to consider in such a risk assessment can include:
- What are the rules for business registration in the foreign country?
- What international tax rules can potentially affect such an expansion? (e.g. tax issues such as transfer pricing, thin capitalisation, tax residency, non-resident withholding tax, foreign trust tax provisions and impact of double tax treaties)
- What rules are there for employing Australians offshore? (e.g. international secondment arrangements)
- What are the tax consequences if Australian tax resident individual shareholders or beneficiaries of Australian trusts become non-residents for tax purposes because of the business expansion? (e.g. CGT consequences on ceasing to be an Australian resident and loss of CGT discount for non-residents etc.)
This is a very complex area. Therefore, please speak with your Nexia adviser before embarking any international expansion project so that we can assist you in planning the best structure for your business depending on your individual circumstances.