On 11 December 2020, the Australian Taxation Office (ATO) provided new guidance in relation to the employer obligations for foreign employers with respect to employees working remotely from Australia who normally reside in another country.
Under this guidance, the ATO considers that individuals may be taxable in Australia from their initial date of arrival in Australia or from 1 July 2020 if they have been working in Australia due to COVID-19 and:
The application of the above will depend on each individual’s personal facts and circumstances. As a consequence, from the initial date of arrival or from 1 July 2020, foreign employers may need to have commenced Pay-As-You-Go (PAYG) withholding and Single Touch Payroll (STP) reporting for amounts paid to affected employees. They will also need to consider the Fringe Benefits Tax (FBT) obligations for benefits provided to these individuals. Superannuation Guarantee obligations may also apply, even where the individual is not taxable in Australia.
These obligations also apply to foreign employers that do not have any business presence in Australia.
The ATO recommends that employers start withholding as soon as it is reasonable to presume that employees may be taxable in Australia.