I'm helping my son out, he's a UK national and right now in Australia looking for freelance graphics work locally in Sydney for 6-9 months. He's also just been contacted by a film graphics company in LA about freelance work and is now wondering what the tax situation will be for himself while he is still in Australia. Obviously from the states will get paid in USD and Australian dollars in Sydney. He is wondering what the tax situation would be. Would the payments need to go into his personal bank account or another account, any advice would be greatly welcomed.
UK UK citizen visiting Australia and freelancing there and for USA clients
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Werner Reisacher
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It depends........
a) If he is considered a legal resident of Australia during his stay in that country, he will be subject to Australian tax? Australia taxes its tax payers on their world wide income. If he is performing the work for the US company while he is treated as a resident of Australia, his US income would be taxable in Australia
b) If he remains a UK tax resident, both the Australian and the US income would be taxed in the UK. You need to research about double tax agreements and foreign tax credits in the UK.
c) He is not subject to income tax in the US provided that he qualifies as an independent Contractor and not an Employee. The acid test for that is how the contract is worded and the relationship handled. To qualify as a Independent Contractor, the company for whom he works can exercise control over his work but cannot define the location nor the time when and where the work will be done. He must be truly independent.
c) I think the question about the bank accounts depends mainly on his personal financial situation during the time he lives in Australia.
d) and finally, do not forget that there will be 3 currencies involved. And as such, all of them are subject to changes in their values.
a) If he is considered a legal resident of Australia during his stay in that country, he will be subject to Australian tax? Australia taxes its tax payers on their world wide income. If he is performing the work for the US company while he is treated as a resident of Australia, his US income would be taxable in Australia
b) If he remains a UK tax resident, both the Australian and the US income would be taxed in the UK. You need to research about double tax agreements and foreign tax credits in the UK.
c) He is not subject to income tax in the US provided that he qualifies as an independent Contractor and not an Employee. The acid test for that is how the contract is worded and the relationship handled. To qualify as a Independent Contractor, the company for whom he works can exercise control over his work but cannot define the location nor the time when and where the work will be done. He must be truly independent.
c) I think the question about the bank accounts depends mainly on his personal financial situation during the time he lives in Australia.
d) and finally, do not forget that there will be 3 currencies involved. And as such, all of them are subject to changes in their values.
Many thanks Werner. he will pay 15% tax whilst in Australia under the Working Holiday Makers scheme. Any USA derived freelance monies paid will probably count towards his UK tax assessment as world income, I guess the Australian earnings might also be of interest to HMCR so the question of double tax lurks, it's where the water gets a bit murky according to my accountant. The key will be keeping good records I think.