Working in Australia for a New Zealand company

Yes, you can work remotely in Australia for a New Zealand company. This is quite common, especially in today’s digital work environment.

There are a few things to consider, especially tax implications, as you need to consider both tax systems, whether you are employed or contracting (employment type), and your tax residency status (Australian resident, non-resident, or temporary resident for tax purposes).

Here is an excellent article from the Australian Taxation Office (ATO): What remote working means for your tax return.

Editors note: I’ve tried to gather everything you need to know, but I’m only human. I’ve read so much! So please ask me any questions you still have after reading this post in the bottom comment section. This will help me improve the content and help you at the same time.

Please note: I am not an accountant or financial adviser and can only give advice based on information I have found online and talking to specialists. I recommend finding an accountant with cross-Tasman experience to help you file your returns, as this situation is complex, especially over the first year.

In this post, you will find information on:

• Visa and Residency Status
• Tax Residency
• Work out your tax residency
• Employment Type
• Taxation
• Superannuation (Retirement Contributions)
• Currency and Payment
• Professional Help
• For more information.

Visa and Residency Status

If you’re an Australian citizen or permanent resident, you can live and work in Australia. For New Zealand citizens, the Trans-Tasman Travel Arrangement allows for easy movement between the two countries without needing a special visa to live in Australia. 

Tax Residency

If you’re working in Australia for an overseas employer, the first thing to check is your tax residency. This decides how you’re taxed. (Australian resident, non-resident, or temporary resident for tax purposes).

When you live in Australia as a New Zealander on an SCV, you can be an Australian ‘resident’, ‘non-resident’, or ‘temporary resident’ for tax purposes.

Editor note: I’ve come across Australian tax residency before when researching buying a house in Australia. Beyond Accountancy’s post, ‘NZ taxes: something every Kiwi in Australia needs to know‘ is a good article to read if you ever plan to buy property in Australia.

One question I haven’t been able to find time yet to answer is… Can you be an Australian citizen while being a tempory resdient for tax purposes… Anyone know?

There are two types of residency in Australia (that I know about): your ‘country residency’ and your ‘tax residency’. The ATO doesn’t use the same rules as the Department of Home Affairs (immigration). This means you:

• can be an Australian resident for tax purposes without being an Australian citizen or permanent resident
• may have a visa to enter Australia (New Zealander on an SCV) but are not an Australian resident for tax purposes.

For a summary of key information about residency status, download Residency for tax purposes (PDF, 296KB). 

Work out your tax residency

You can use the ATO’s residency tests to work out if you’re:

• an Australian resident for tax purposes – you must declare on your tax return all income you’ve earned in Australia and overseas,
• if you’re a foreign or temporary resident for tax purposes – declare any income earned in Australia; foreign income and capital gains don’t have to be declared.

Read more in the ATO’s article ‘Your tax residency: If you are coming to Australia or going overseas, you may need to work out your residency for tax purposes‘.

Your tax residency status affects how your employer taxes you…

Australian resident for tax purposes

If you are an Australian resident for tax purposes, you will be taxed in Australia:

• Your employer has to find out if they need to withhold tax in their country (New Zealand).
  I will further research the IRD perspective.
• In Australia, you’re taxed on worldwide income. Your employer must withhold tax under PAYG withholding. If there is a double-tax agreement between our countries (Yes, New Zealand and Australia), you’ll receive a foreign income tax offset when you lodge your return.
• Whether you have an NZ bank account or an Australian bank account doesn’t matter.
• Your foreign employer may have to pay super.

Foreign or temporary resident for tax purposes

If you’re a foreign or temporary resident for tax purposes, you will be taxed in Australia:

• You’ll need to check with the Department of Home Affairs if you’re able to work in Australia.
• You’ll need to work out whether your income is Australian-sourced or foreign-sourced.
• Generally, you don’t need to tell us about income received from outside Australia unless your tax residency changes.

Contractor and not an employee

If you’re a contractor and not an employee, you’ll need to:

• Check if you need an ABN
• Pay your own tax,
• Pay your own super (if you choose to), and this opens in a new window
• Claim a foreign income tax offset this opens in a new window  (if applicable) when you lodge your tax return to avoid double taxation.

Source: ATO Community – What remote working means for your tax return. 

Employment Type

Remote Employee: You can be hired as a remote employee of the New Zealand company and receive salary, benefits, and entitlements according to the terms agreed upon with the company.

Independent Contractor: Alternatively, the company may hire you as a contractor, in which case you may have more flexibility but fewer employment protections. 

Taxation

If you work for an NZ company while living in Australia, your tax obligations will depend on your residency status. If you’re a resident for tax purposes, you’ll need to declare your worldwide income in Australia. If you pay tax in NZ you can apply a foreign income tax offset on your Australian return. As described above.

For the first year, you will need to submit tax returns in both New Zealand and Australia.

Editors note, this is a comment from the ATO’s community site:

New Zealand considers you a tax resident in NZ until you have left the country for 325 days, Australia considers you a tax resident of their country as soon as you have the intention to stay permanently in Australia.

The publishers understanding is you are obliged to pay taxes in New Zealand for those first 325 days, and thereafter your tax commitment will be shifted to Australia (if you become a Australian resdient for tax purposes).

You won’t be double-taxed by Australia for those first 325 days, however they might still expect you to pay medicare insurance of 1-3% of total income (I still need to figure out exactly how this part will work). In NZ you will need to fill in an IR330C with the minimum witholding rate set at 15%, otherwise your employer will be forced to use the default withholding of 40%. You’ll pay at least 15% of your NZ based income as NZ income tax as long as you’re being paid by an NZ company (you can claim this as overseas tax on income in Australia and won’t be double taxed).

It’s important to get an accountant with Oz/NZ experience, at least for the first year as this stuff is complex.

Read full post here – ATO’s community site.

Because tenancy/residency is based on self-assessment, the ATO recommends you research the subject and work out your residency status for tax purposes.

These are both good articles: tests to determine your tax residency and an online tax residency tool.

It’s also worth noting that Australia and NZ have a tax treaty, which prevents multiple countries from applying tax to the same income.

If you’re an Australian non-resident for tax purposes, you only need to report income from Australian sources on your Australian tax return. Employment income from the NZ company won’t need to be reported in Australia. If the income is paid into a bank account in Australia in your name and earns interest, the interest amount would be reportable.

If you’re living in Australia, you are generally considered an Australian tax resident, which means your income will be subject to Australian taxes.

Australia and New Zealand have a Double Tax Agreement (DTA), which helps avoid double taxation on income earned across both countries. This means you won’t be taxed twice on the same income, but you should check how the agreement applies to your specific situation.

It’s important to ensure that your employer is aware of these tax obligations so that your pay and tax deductions are handled correctly. 

Superannuation (Retirement Contributions)

Superannuation (or ‘super’) is a form of saving for retirement in Australia. Read more in my Australian Super post.

As a remote worker in Australia, you are likely subject to Australian superannuation laws, meaning your NZ employer may need to contribute to an Australian superannuation fund on your behalf.

Generally, this does not depend on your visa or tax residency status.

To work out if you’re entitled to super, use the ATO’s Am I entitled to super tool. If you are, you may be able to choose where and how your super is invested.

Super is designed as an investment for retirement. But if you leave Australia after having worked here on a temporary resident visa, you may be eligible to claim your super (less tax) as a Departing Australia superannuation payment (DASP). You can only submit a DASP claim after you have left Australia and your visa has expired. However, you can start the application process before you leave, which may make it easier to complete. If you receive a DASP, you’re also entitled to a refund of any Division 293 tax you paid.

New Zealand citizens are not eligible for a DASP. However, New Zealand residents or citizens may be able to transfer any Australian super they have accumulated to a KiwiSaver scheme provider or have it directly paid to themselves if eligible. This includes unclaimed super money held by the ATO. See the ATO’s article on Trans-Tasman retirement savings transfers. 

Currency and Payment

You will need to agree with your employer whether you’ll be paid in Australian or New Zealand dollars and into your Australian or New Zealand bank account. Where your bank account is based (NZ or Australia) doesn’t affect your tax residency.

Exchange rates and bank fees for international transactions could also affect how much you ultimately take home. I highly recommend researching bank fees and foreign exchange options. 

Professional Help

It’s a good idea to consult with a tax professional or employment lawyer who specializes in cross-border work arrangements to make sure you’re compliant with both Australian and New Zealand regulations.

You are probably going to need an NZ-based accountant and an Australian-based accountant for the first year.

Unfortunately, I have been unable to find an accountant who specialises in NZ and Australia tax accountancy, so sadly, I can’t recommend anyone to you. If anyone does know of an accountant who specialises in the above, please recommend them in the comments below. 

For more information

For more information, please visit the below websites:

• Australian Taxation Office (ATO): What remote working means for your tax return
• IRD: Tax for non-resident taxpayers

You might also be interested in…

The below posts might interest you:

• Australian Tax
• KiwiSaver for your Home Deposit
• Foreign Exchange/Money Transfer

Still, got unanswered questions?

If you’ve read the above content and the answer to your question isn’t there, please write a comment below, and I’ll research the answer for you.

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