One of our employees is moving to China and will still work for us remotely. Is there anything we need to consider for tax purposes under this situation?
Do we still need to withhold PAYG tax? Although the employee will be in another country, she will still have her TFN and Australian banking account.
In the event the team member remains an employee:
- Medicare levy will not be payable due to non-residency.
- There is no obligation on employers to pay statutory superannuation (9.5%) to non-resident employees for work they do outside of Australia.
Given this, you may wish to consider whether the worker can be classified as a contractor.
If the worker does not work under your control and direction, chooses their hours of work after being assigned tasks, and is able to delegate their work, then there is an argument that the person is a contractor.
This may be preferable to both parties, with the remote location and change of residency adding further weight to the argument.
If she is a genuine contractor (refer to our comments), regarding the need to withhold PAYG tax, the answer is no.
Also key, is whether this is a genuine change of residency or just an extended absence.