These 10 points are designed for those investing into Australia and those who have plans to do so. We aim to keep the points short and sweet, and to merely list snippets of relevant but easy to read information.
August 2024
- Generally, Australian employment law applies no matter where the employer is resident, as long as the employee is performing their services physically in Australia.
- All employees, whether resident or non-resident of Australia, need to pay superannuation on ‘ordinary time earnings’ (basically salary and wages) to all employees in Australia.
- If you operate in Australia via a ‘one man company’, you fall into the scope of the so-called PSI rules. These are anti-avoidance rules which may result in the ATO disregarding your company and taxing you as if you derived the income personally, as an individual.
- If a worker has been engaged as an ‘independent contractor’, a ‘consultant’ or the like, when they are in reality working as an employee (even a part-time employee), they have significant leverage over the party engaging them. An acrimonious ending of the relationship may well result in a claim by the worker for unpaid superannuation, annual leave, sick leave, parental leave and the like, as well as claiming compensation for unfair dismissal and other entitlements an employee has under the law.
- An overseas employer of staff in Australia needs to:
a) register for and administer PAYG,
b) pay superannuation, and
c) take out workers compensation insurance. - Working holidaymakers (visa types 417 and 462) are taxed at 15% of their earnings up to AUD 45,000 – from the first dollar of income. They are not entitled to the AUD 18,200 tax free threshold. Anything above this threshold is taxed at ordinary rates.
- Non-resident individuals are not entitled to the AUD 18,200 tax-free threshold.
- An Australian company can, if certain conditions are met, be exempt from tax on the profits of a foreign permanent establishment.
- Stamp duty and payroll tax (a tax on the employer) are levied by the states; the rules and rates differ from state to state.
- Some tax rates (with exceptions):
Company tax – 25% or 30%
Dividend withholding tax – 30%
GST – 10%
Individual: rate on first AUD 18,200 for residents – 0%
Individual: top personal tax rate – 45%
Inheritance tax – 0%
Interest withholding tax – 10%
Medicare levy – 2%
Medicare levy surcharge – 1%, 1.25% or 1.5%
Payroll tax – 4.75% to 6.85%
Royalty withholding tax – 30%
Superannuation – 11.5%
Tax on a permanent establishment – 25% or 30%
Working holidaymakers minimum tax (visa types 417 and 462) – 15% on the first dollar of income
This message is not given in the form of an opinion, legal opinion or tax advice. If any of the information provided is of interest or relevance to you or your company we would strongly recommend you contact us or another qualified professional for specific advice.