Working for a foreign company

[ivesn]

Hi there

I would like to move to Australia but keep my work-from-anywhere style jobs with South African companies. Assuming my employers would be okay with this, does anyone know the implications for

1) obtaining permanent residence in Australia
2) income tax

Thanks in advance for considering my quesiton.

Regards
Norman

 

[skimread]

What do you do may I ask?

 

[rrh]

Not sure how it would affect you but Oz sets new standards for being a PITA if anything is a little out of the ordinary, especially if they think that they are being taken advantage of ...

Best speak to an expert: he may well advise that you shouldn't even mention tele-commuting.

 

[skimread]

You could do it two ways I guess.
Get an OZ tax number and let your SA company pay you in your Oz account and declare it on your Oz tax return as work income. On SA income as foreign income. However you would need a Oz work visa I assume seeing your working from home. I don't think your SA company would want to do it this complicated way.

Let your SA company pay into your SA bank account as per normal and your SA income as taxed as normal. On Oz you declare foreign income. Working this way don't think it will help your PR application.

I think you do realize how difficult it is to get a work VISA for Oz. For a Brit it is easy, not so for a South African.

 

[deweyzeph]

I think you do realize how difficult it is to get a work VISA for Oz. For a Brit it is easy, not so for a South African.

Actually it makes no difference whether you are British or South African or Mongolian, the work permit rules are exactly the same for every nationality in Australia.

The only advantage a British citizen has is that up until the age of 31 you can apply for a working holiday visa, which is limited in scope as to what you can do and how long you can work for the same employer. But for standard work permits the rules are the same for everyone regardless of nationality.

 

[ivesn]

Many thanks for the responses.

@skimread, I have a PhD and years of work experience; mostly in software development with some minor but nontrivial project management.

I am eligible for an Independent Skilled Migrant visa by the relevant points test. This means I don't need sponsorship from a prospective employer. Therefore I'm thinking it can't hurt my PR application.

However, if I get taxed fully on both ends it would not be practical.

@rrh who would be an expert in these matters?

 

[KalMaverick]

However, if I get taxed fully on both ends it would not be practical.

If you are permanently going to stay in Australia you are going to no longer be a South African resident, therefore you only get taxed on income from a source within (or deemed to be) within South Africa.

Your income from Australia has nothing to do with South Africa.

The general rule is you do not get taxed twice, but you will get taxed.

EDIT: Someone might be able to get more in-depth information but as far as I know if you emigrate you are deemed to dispose of your assets, so there will be Capital Gains Tax consequences.

 

[Greg C]

Many thanks for the responses.

@skimread, I have a PhD and years of work experience; mostly in software development with some minor but nontrivial project management.

I am eligible for an Independent Skilled Migrant visa by the relevant points test. This means I don't need sponsorship from a prospective employer. Therefore I'm thinking it can't hurt my PR application.

However, if I get taxed fully on both ends it would not be practical.

@rrh who would be an expert in these matters?

Hello there.

Let me answer the relevant tax part of your question

right lets start with the theory.
Not in general,you will never be taxed twice,rules are in place to avoid double taxation where we need to be specific is if countries don't have a double taxation agreement in place.Without digressing for your case you will not be taxed twice.The following is how you will be taxed

A physical presence test will be done on you to decide whether you are a resident of south africa and thus to be taxed in South Africa it is as follows.

Have you resided in South Africa for

i) 91 days in aggregate during the year of assessment under
consideration;
ii) 91 days in aggregate during each of the three years of
assessment preceding the year of assessment under
consideration; and
iii) 549 days in aggregate during the three preceding years of
assessment.

If you meet ALL of the above requirements you are a resident of SA and taxed in South africa.
If one of the criteria is not met,you are not a resident and will be taxed in whatever land relevent for your case OZ.

So simply put,When you leave this year you will be a SA resident because of the above criteria.Next tax assessment will change and be taxed in OZ.

Hope all this helps,

 

[patrick]

What do you do may I ask?

+1 I'm still looking for the job I can make a living from while on my dream yacht

 

[Greg C]

If you are permanently going to stay in Australia you are going to no longer be a South African resident, therefore you only get taxed on income from a source within (or deemed to be) within South Africa.

Your income from Australia has nothing to do with South Africa.

The general rule is you do not get taxed twice, but you will get taxed.

EDIT: Someone might be able to get more in-depth information but as far as I know if you emigrate you are deemed to dispose of your assets, so there will be Capital Gains Tax consequences.

I gave more depth on how he will be taxed with regards to residency and non residency for OZ and South africa purposes etc.

You my good sir are 100% correct.He will dispose of his assets and CGT will be payable currently at 33.3%.
Remember donations tax also if you decide to give things away after you leave either you or the person that you donate it too will be liable for donations tax.

Assuming ofcourse you do donate there will also be CGT aswell involved anyway semantics

 

[deweyzeph]

I gave more depth on how he will be taxed with regards to residency and non residency for OZ and South africa purposes etc.

You my good sir are 100% correct.He will dispose of his assets and CGT will be payable currently at 33.3%.
Remember donations tax also if you decide to give things away after you leave either you or the person that you donate it too will be liable for donations tax.

Assuming ofcourse you do donate there will also be CGT aswell involved anyway semantics

CGT and donations tax liabilities are incredibility difficult for SARS to prove.

 

[Greg C]

CGT and donations tax liabilities are incredibility difficult for SARS to prove.

Very blunt but inaccurate response.First off it is in fact the TAXPAYERS responsibility to dispute or argue an incorrect taxation or query it is not SARS' responsibility.If you believe you were incorrectly taxed its your responsibility.

With regards to donations there is an exemption up to 100 000 for individuals.So in essence you need to be donating alot before donations tax takes hold.

CGT however with relatively big capital assets at time of death/sale/immigration are generally easily seen as

1)the estate is wound up for a death,making it easy to account for CGT as everything will be declared,and an executor will be assigned to the estate.

2)Visa;s theoretically have detail with regards to residents moving etc

3)Sale of a house or car,excluding trade ins and that sort of thing, will go through a bank and unless you some how managed to save that sort of money cash that isnt in a bank,the bank will disclose these sort of movements if confronted by SARS.

I agree with you however that in some sense it is hard for SARS to keep count of everything but you will notice the focus is on big ticket items generally,it is not to the benefit of SARS to hunt a person for donations tax of say R200 as opposed to R10 000 etc.So I think a bit of decision making goes when they decide how to allocate their resources to hunt and collect certain taxes,

 

[Celine]

very briefly put and there is nothing to it...............you take up residency in australia, you will therefore become liable to pay tax in australia and not in south africa. therefore you will not be responsible to submit a return in south africa. no need for any long winded codswallop.

 

[KalMaverick]

very briefly put and there is nothing to it...............you take up residency in australia, you will therefore become liable to pay tax in australia and not in south africa. therefore you will not be responsible to submit a return in south africa. no need for any long winded codswallop.

So to clarify if he live in Australia and does work from home type jobs being paid by South African companies there will be no tax consequences in South Africa?

 

[IrieItalian]

I have a Question..

If i work for a Foreign based company and they are reluctant to give me a payslip...
What does that mean?
I asked for a payslip and they asked what must be on the payslip?
Are there ways around this so i don't get my company into ****.

The company i work for supplies products to distributors. They don't have any offices here in South Africa.

 

[Greg C]

Hello there.

Let me answer the relevant tax part of your question

right lets start with the theory.
Not in general,you will never be taxed twice,rules are in place to avoid double taxation where we need to be specific is if countries don't have a double taxation agreement in place.Without digressing for your case you will not be taxed twice.The following is how you will be taxed

A physical presence test will be done on you to decide whether you are a resident of south africa and thus to be taxed in South Africa it is as follows.

Have you resided in South Africa for

i) 91 days in aggregate during the year of assessment under
consideration;
ii) 91 days in aggregate during each of the three years of
assessment preceding the year of assessment under
consideration; and
iii) 549 days in aggregate during the three preceding years of
assessment.

If you meet ALL of the above requirements you are a resident of SA and taxed in South africa.
If one of the criteria is not met,you are not a resident and will be taxed in whatever land relevent for your case OZ.

So simply put,When you leave this year you will be a SA resident because of the above criteria.Next tax assessment will change and be taxed in OZ.

Hope all this helps,

Everything was right up until your comment of Next tax assessment will change and be taxed in OZ. which is incorrect.

The 549 day exclusion rule will prevent you from becoming a resident of OZ and be taxed in SA accordingly. Until the above requirements are met in FULL you are a South african resident. Enjoy

 

[Greg C]

CGT and donations tax liabilities are incredibility difficult for SARS to prove.

Both are true but remember in all situations...when SARS taxes you in any form it is UP TO THE TAXPAYER to prove or disaprove otherwise not SARS. If you believe something is a PUA or cash etc it up to you to prove it if SARS taxed you accordingly