As part of the ATO’s initial COVID-19 response, it did not expect foreign resident employers to register for PAYG withholding if the only reason their employee was working in Australia was because of the effects of COVID-19 on travel and it was anticipated they would leave before 30 June 2020. This approach applied until 30 June 2020. From 1 July 2020, employers must consider whether the employment income of their employee is subject to PAYG withholding.
PAYG withholding applies to:
A foreign resident employer will usually be required to pay super for Australian resident and foreign resident employees who perform work in Australia, otherwise the super guarantee charge will apply. Employers must pay super in addition to their employee’s wages if employees receive $450 or more before tax in a calendar month and are 18 years of age or older. Eligible employees can claim the super paid for them as a Departing Australia Superannuation Payment (DASP) when they leave Australia if they meet all the requirements. A final DASP tax will be withheld from their payment when it is made.
Fringe benefit tax (FBT)
Employers may also have FBT obligations in Australia if they are required to withhold PAYG from payments to their employees. FBT applies to certain benefits that employers provide to their employees (or their family or other associates) that are in addition to, or instead of, salary or wages.