This trend away from the more traditional long-term assignment creates both reputational and financial risk, including tax obligations which in Australia will include compliance with individual income tax, fringe benefits tax (FBT), pay as you go (PAYG) withholding tax, superannuation guarantee and payroll tax matters, as well as the risks associated with creating a permanent establishment.
Globally, revenue authorities are becoming progressively more active in identifying these short term business travelers, employing more sophisticated investigative techniques in order to ensure they receive the right share of the tax.
In Australia, there is greater scrutiny from the Australian Taxation Office (ATO) as it analyses and shares information with the Department of Immigration and Border Protection and with other countries.
As the tax morality debate continues, Tax Managers are becoming increasingly focused on ensuring they are minimising the risks associated with this type of workforce movements. Key factors you should consider are:
- do you have a process or the technology to identify the people who may fit this category?
- do you have a process to monitor and manage the tax (and immigration) obligations arising?
- do you have engagement from the business to ensure that processes are properly implemented to manage risk?
If you are interested in more information, please contact Daniel Hodgson.