Ask LH: What Tax Rules Do I Need To Know For A Second, Overseas Job?

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Dear Lifehacker, I recently was lucky enough to land a contractor job as a remote QA tester for a company in Canada. My questions are to do with tax. I will be paid for the hours I put into this job on top of my normal income. What forms will I need to fill out? And will I be able claim the costs of my consoles, home internet connection and other expenses associated with it? Thanks, Game On

Games picture from Shutterstock

Dear GO,

First thing -– what we're offering here isn't the same level of advice you'd get from an accountant or financial professional. It's just general information and you should consult an expert (whose fee will be a legitimate tax deduction).

According to the ATO all foreign income has to be declared on your Australian tax return regardless of whether it is assessable (subject to tax) or exempt. No ifs, buts or maybes.

As this is work you'll be undertaking in Australia then it's reasonable to expect that you'll have some home office expenses that you can claim as deductions. Your accountant will let you know what are considered reasonable claims.

Based on your email, my assumption is that you already have a full-time job where you're paid as a PAYG employee. With the extra income, set aside about a third of it and pretend it doesn’t exist. That way, when the end of financial year rolls around and you have to pay tax on that income (assuming it's not exempt) you'll have the money ready.

If you're not a PAYG employee and run your own business then the way you account for that income will depend on how your business is structured. Again, your best bet is to talk with an accountant.

There is some good information on the ATO's website as well. We've listed a few of the pertinent links below for you.

Reporting your foreign employment income [Australian Tax Office]

What is foreign income? [Australian Tax Office]

Exempt foreign employment income [Australian tax Office]

Cheers Lifehacker

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Comments

    I did this for a while. Easiest thing to probably do is set up yourself with an ABN and invoice your employer as a client. You will have to set aside a chunk of your income to pay tax and, depending on how much you're earning, you'll probably have to register for PAYG.

    You should be able to claim all legit business expenses as per normal as well as, perhaps a few other things you're not already claiming (like rent - check with tax advisor).

    The other thing to note is GST - if your ABN earns over $70k you will have to register for GST, even though your Canadian income won't attract GST.

    And definitely get a tax advisor - I find my local tax-return-factory does the job nicely.

    The smart thing to do is look at offshore financial structures which can offer better ways to reduce tax.

    If you're making more than AU$10k p/a this would be the way to go.

    Do your own research then contact an accountant who specialises in offshore finance.

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