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Tax laws tricky for work in Australia 13 Feb 2012
IF YOU, or anyone you know, work in Australia, be careful. The tax laws are tricky.
 
Double tax
 
For example, while you’re there on an assignment you look for follow-up jobs and successfully negotiate new deals. The income would probably be taxable both in Australia and New Zealand.
 
“No problem,” I hear you say. “Isn’t there a double tax agreement which prevents me being over-taxed?”
 
Yes, but the top tax rates in Australia are higher than here, so could cost you money if your income is high. Also, if you are trading through an ordinary company, the tax the company pays overseas doesn’t count when it comes to paying company dividends. In the long run, you will are likely to be double taxed. Best to seek advice before you start.
 
Travel costs
 
You can often justify travel costs between the two countries. However, if you decide you are not going to use your company when working in Australia, you could find travel costs are not tax deductible. This is because, if you then start up as a sole trader, you have a new business. The new business requires you to go from your home to Australia to start work. Travel between home and work is not tax deductible. On the other hand, if you have an on-going business (through your company for example) the travel is part of your ongoing business operation and is likely to be tax deductible as the travel is between work places while you are on work.
 
Which costs are deductible? Now there’s another problem, which is too complex to discuss here.
 
There are ways around these difficulties – getting which country you are in right, when you negotiate, is a good start. Talk to us and we’ll put you on the right track.
 

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