Consultancy work for Australian business - tax implications

[A14RGS]

I run my own engineering consultancy, UK registered as a Limited Company.
A former colleague, based in Sydney, has asked me to undertake some work for him, which I can do remotely from the UK. We've yet to discuss T&Cs, but I expect to invoice is AU$.
I realise that it'll be Zero Rated for VAT, but are there any rules that are likely to apply for tax in Australia? e.g. will I need to register the business and charge local VAT (GST)? Any other implications?
We're talking occasional days or weeks of work for one person (me) - not full-time for a large team (if that makes a difference)

Advice appreciated from those in the know please.

[anonymous-user]

We regularly employ UK consultants to work remotely, (Not Australia).Your issue is withholding tax, that will depend on where you are being paid from. If you are paid by a UK subsidiary may not be an issue. Most countries accept the withholding tax as the final tax amount, and then you don't need to file. In some regimes you can choose to file if you think your taxable profit will give a lower rate, but its very hard to prove a lower rate in practice, and not something I'd recommend.
The easy way, for a one of transaction, is to quote all rates as excluding service and withholding taxes. So they gross your payment up. We wouldn't accept that but if is some one you know they may,
You should be able to offset any Aus tax against UK liability.

[sgrimshaw]

As a Consultancy Partnership (legal partnership not ltd company) we run into this quite often.

Obviously, each country has it's own rules but there are a couple of key factors which are generally common:

1. Withholding tax normally only applies to revenue generated IN the country. As you are performing the work in the UK your revenue is generated in the UK, it's more than likely outside the scope of Australia's WT rules.

2. Withholding tax, if it applies, is relatively easy to get exemption from if the supplier of services is a Limited Company, especially where treaties exist to avoid double taxation (one does between UK and Aus). For individuals etc, it is still possible to get exemption but there tends to be more hoops to jump through, in some cases it is easier to claim relief for the tax paid overseas.

[A14RGS]

Thanks gents, very useful.
I'll see what T&Cs are proposed and also discuss further with my accountant (who 'doesn't specialise in Australian tax rules').

I'll also update here as appropriate.

[sgrimshaw]

A14RGS said:

We've yet to discuss T&Cs, but I expect to invoice is AU$.

As you're still at the discussion stage, either push to invoice in GBP or get a consultancy rate good enough to not worry about any potential exchange fluctuations.

In 14 years in the game we've never invoiced in a currency other than GBP, never had a customer with a problem with it.

[A14RGS]

sgrimshaw said:

A14RGS said:

We've yet to discuss T&Cs, but I expect to invoice is AU$.

As you're still at the discussion stage, either push to invoice in GBP or get a consultancy rate good enough to not worry about any potential exchange fluctuations.

In 14 years in the game we've never invoiced in a currency other than GBP, never had a customer with a problem with it.

OK thanks - I expected that they would only accept local currency (and hence I'd already massaged the rate to cover any likely exchange fluctuations), but I'd rather stick with GBP.

[anonymous-user]

Withholding tax applies to money that crosses a border not where it is generated, I'm not am expert on Aus, but generally if you do work onside a country and then get paid form a bank account in country you will be subject to withholding tax, as said this is governed by various tax treaty.
My wife actually legally avoids tax this way by leaving t money in the source county and spending it there, (rather special circumstances apply)
I know we wouldn't deal with you in pounds, and we wouldn't deal with a partnership or sole trader in the UK, we require a certificate of incorporation as a limited company as part of our award process. The two different experiences on here, shows how things can vary and why exact advice is needed,

[A14RGS]

Sorted.
I'm arranging to be contracted by the UK arm of the business, who will then invoice my time with their Australian colleagues - this is standard practice for the business..
This means that my T&Cs will be with the UK office, payment will be in GBP and it'll also give me the opportunity to work for any part of the global business, not just Australia.

Thanks for all the useful guidance.

[sgrimshaw]

A14RGS said:

Sorted.
I'm arranging to be contracted by the UK arm of the business, who will then invoice my time with their Australian colleagues - this is standard practice for the business..
This means that my T&Cs will be with the UK office, payment will be in GBP and it'll also give me the opportunity to work for any part of the global business, not just Australia.

Thanks for all the useful guidance.

That's probably the best possible outcome, we worked all over the world on that basis with one of our customers for over 10 years.