Kiwi working from NZ, remotely for Aussie company

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kingdragonfly

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#250849 28-May-2019 13:05

I have a New Zealand citizenship.

I'm looking at a full-time permanent IT position for an Aussie company. It's a full-time remote position, with no travel.

All business activities are based in Australia.

I'm not relocating. I'll be staying in NZ.

The Aussie company has never had an overseas employee; I'd be the first.

Is there anything I need to know about taxes, work visas, Kiwi saver, ...?

I currently have a BNZ bank account. Not sure if that matters.

Any tips appreciated

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#2247045 28-May-2019 13:25

Are you an employee on their payroll, or a contractor that invoices them for your time or work?

After you have gauged opinion here, check with an accountant.

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networkn

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#2247046 28-May-2019 13:27

Personally, I'd skip the opinions here (no disrespect to those who share them) and get advice from an accountant in the first instance. Relying on information provided by people who may not have a full understanding of your situation isn't going to be a defense to getting your tax obligations wrong.

ObidiahSlope

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#2247048 28-May-2019 13:33

If your relationship with your new employer is as an employee rather than a contractor and the Aussie company is happy for you to sort it out this IRD guide will help you with the tax situation.

https://www.classic.ird.govt.nz/resources/e/b/eba54754-8afb-446c-b5eb-cc36f2943fa2/IR356.pdf

Obsequious hypocrite

kingdragonfly

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#2247049 28-May-2019 13:34

Dynamic:
Are you an employee on their payroll, or a contractor that invoices them for your time or work?

After you have gauged opinion here, check with an accountant.

I'd be an employee on their payroll

wellygary

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#2247051 28-May-2019 13:40

1.Get a NZ accountant with experience working with the Australian Tax Office ( ATO are significantly more "robust" than the NZ IRD)

2. You will have to pay tax in NZ on your earnings,

3. Your employer may also have to withhold tax on your earnings for Australian taxes,

4. You may have to claim back the taxes paid in Australia from NZ's IRD based on double tax agreements,

5. See 1....

kingdragonfly

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#2247068 28-May-2019 14:08

I'll talk to an accountant. Any suggestions appreciated.

I came across the web page

https://www.classic.ird.govt.nz/international/business/ausnz/comp-inctax/comp-income-tax.html

It makes these points

Residency is determined by where you live most of the tax year.

Australians residents are taxed on their worldwide income.

If you're employed in Australia but don't live there (non-residents), you are taxed on Australian-sourced income.

Oddly Australian income tax rates for non-resident individuals (people living outside of Australia) are substantially higher than people who live and work in Australia.

Someone making $88,000/year would pay $9,000 more in Aussie taxes, by the fact you live outside of Australia.

It sounds punitive, because obviously if you live outside Australia, you're using less Australian resources. Probably used to punish overseas Kiwis workers.

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#2247069 28-May-2019 14:09

I'd be raising that with your potential employer, they may choose to compensate you for that.

acetone

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#2247097 28-May-2019 14:35

I agree with the others in that you should talk with an accountant.

I can offer insight into how I do this. I work for the UK, 100% remote.

I am an employee on their payroll, I have the legal right to work there as I am a UK citizen. I have a no tax status with HMRC which means my employeer pays me the gross amount each pay run.

I am registered with the IRD as an IR56 taxpayer [1]

a New Zealand-based representative of an overseas company

I then do my own paye each pay run via the IRD website, takes less than 5 minutes.

Happy to discuss details, just send me a PM.

[1] https://www.ird.govt.nz/roles/ir56-taxpayers

Zeon

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#2247151 28-May-2019 14:56

acetone:

I agree with the others in that you should talk with an accountant.

I can offer insight into how I do this. I work for the UK, 100% remote.

I am an employee on their payroll, I have the legal right to work there as I am a UK citizen. I have a no tax status with HMRC which means my employeer pays me the gross amount each pay run.

I am registered with the IRD as an IR56 taxpayer [1]

a New Zealand-based representative of an overseas company
I then do my own paye each pay run via the IRD website, takes less than 5 minutes.

Happy to discuss details, just send me a PM.

[1] https://www.ird.govt.nz/roles/ir56-taxpayers

Is this mandatory or can you just do an IR3 at the end of each year?

But yea I wonder if double taxation agreements apply and you need to withhold payments. This happens with us in India. The land of forms and bureaucracy - its like a celebration every time a remittance makes it through!

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acetone

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#2247159 28-May-2019 15:01

Zeon:

acetone:

I agree with the others in that you should talk with an accountant.

I can offer insight into how I do this. I work for the UK, 100% remote.

I am an employee on their payroll, I have the legal right to work there as I am a UK citizen. I have a no tax status with HMRC which means my employeer pays me the gross amount each pay run.

I am registered with the IRD as an IR56 taxpayer [1]

a New Zealand-based representative of an overseas company
I then do my own paye each pay run via the IRD website, takes less than 5 minutes.

Happy to discuss details, just send me a PM.

[1] https://www.ird.govt.nz/roles/ir56-taxpayers

Is this mandatory or can you just do an IR3 at the end of each year?

But yea I wonder if double taxation agreements apply and you need to withhold payments. This happens with us in India. The land of forms and bureaucracy - its like a celebration every time a remittance makes it through!

Yes this is mandatory, you can not simply pay all your tax at the end of the year via the IR3.

The tax is due the 20th of the following month.

Dynamic

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#2247179 28-May-2019 15:40

It may be simpler to register as a company in NZ and invoice your 'customer'.

Advantages include the customer just paying you 100% of your invoice, and you can then claim/deduct home office expenses to slightly reduce your tax.

Disadvantages include losing employee protection benefits. (I can't find the article now but I read recently in the news about a lady overseas who worked for a NZ company for a month and then they stopped paying her.... she submitted a claim to the NZ Employment Relations Authority and won, without having set foot in the country.)

Again, thoughts that would need discussing with an accountant.

If you went down this track, you would pay Provisional Tax a handful of times per year, so you MUST be disciplined about setting this money aside.

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kingdragonfly

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#2247461 29-May-2019 07:45

I'm not an accountant. I'm not a tax expert. I've never lived in Australia. You've been warned.

For others who come upon this thread, know that Australia tax system punishes "non-residents" with additional taxes.

It's unfair, and it seems to intentionally target Kiwis, but that's the reality.

What does Australia consider a non-resident? It's where you've been living, since July, the start of their tax year.

The easiest way to be considered a resident is living for more than half a year. Again the tax year is from July to July.

Worst case if you starting living in Australia from February (7-6 = January), you'd be a non-resident for two years.

Here's the official webpage

https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Residency/

On another subject, New Zealand and Australia have and agreement that prevent double taxation.

https://taxpolicy.ird.govt.nz/tax-treaties/australia

acetone

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#2252830 6-Jun-2019 11:00

Have you spoken to an accountant yet and if so, what did they come up with for your situation?

kingdragonfly

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#2253192 6-Jun-2019 16:30

Decided to go with the sole proprietor path, to save on taxes.

It does lose job guarantees and stability, but I figure it's be hard to pursue wrongful dismissal in Aussie courts if that happened in the future.

The other downsides is I could get stuck with unpaid invoices for work done, so I have to maintain large savings to negate.

CokemonZ

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#2253879 7-Jun-2019 14:56

I employ several people in other countries - Australia, the US, Spain and the Philippines.

Contractor is the only way it really works, setting up and managing all of the employment complexities in all of these countries would be a nightmare.

Make sure you get benefits though - or at least the appropriate amount of money for them, as the company will not be paying for them. Generally get them in the contract if you can as if your direct manager leaves any informal arrangements may go out the window.

eg:

Kiwisaver employer contribution

Health/life insurance

Work hardware/internet connection/cellphone

local stat days off & paid for

In addition just get them to pay you the same amount per month for 12 months, not a daily or hourly rate.

Gives you security of income and makes it super easy for their accounts team. Anything you can do to make life easy for accounts is a big win if there ever is a payment issue.

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