Your employer has offered you a role overseas and you are looking forward to the professional development and the experience of living and working in a different country. However, there is a range of legal matters you will need to consider, including the obvious – and complex – one of negotiating the terms of your overseas employment contract. Equally important, you will need to know your tax residency status as an expatriate, as this can have significant unwanted consequences if done incorrectly.
1: Your overseas employment contract
Many executives and professionals spend a lot of time negotiating the terms of their remuneration and assume that the cost of relocation, day to day living expenses and the expense of returning home for family visits will be covered by their employer.
It is extraordinarily expensive to relocate overseas, and in some countries the cost of living is high. It is important to understand the details of what is, and isn’t, covered in your relocation expense account and this needs to be discussed and documented as part of your employment contract terms.
It will be too late once your contract negotiations conclude and you sign your agreement, to go back and ask for more. Here are the key relocation matters that need to be discussed and agreement found, during your employment contract negotiation:
- Moving costs
- Housing allowance
- Quality of living allowance
- Travel allowance and family reunification allowance
- Health insurance
2: Your tax residency status
Tax residency is a complex area of tax law that involves collaboration between your lawyer and your accountant.
The definitions of tax residency for mining and resources personnel working overseas can be confusing, to say the least. However, it is important to clarify your tax residency status so that you meet your obligations to the ATO as an Australian resident or, if you are deemed a resident of the country where you are living and working, that you meet your tax obligations there.
Whether the ATO considers you a tax resident or not depends on a ‘totality of factors’ determined by four tests:
- Resides Test
- Domicile Test
- 183 Day Test
- Superannuation Test
The question of whether you are an Australian tax resident or a tax resident of another country while living and working overseas will be influenced by matters including:
- whether there are family members living in your former family home in Australia;
- whether you are renting it out;
- whether you have removed your personal effects; and
- whether you have a family reunification allowance (outlined in your employment contract) that pays for you to visit your family in Australia in your former family home.
Understanding how all these complex elements fit together will require advice and we strongly urge you to seek support, so your experience of living and working overseas is positive, rather than leaving you severely out of pocket.
Please take a moment now to view/download our strategy paper for mining and resources personnel who live and work overseas.
If you would like to find out more of the important legal matters that require your attention when you are living and working overseas, please contact Ian or Craig: 61 (0)7 3007 2000 or firstname.lastname@example.org
Resources Unearthed is a solutions hub that provides integrated financial, legal, property and accounting & business advisory services for executives, professionals and business owners in mining and resources.
No responsibility will be taken by Hillhouse Legal Partners for loss occasioned directly or indirectly to any person acting or refraining from acting wholly or partially upon or as a result of the material in this publication.