PAYG withholding and employees who work in a foreign country

Introduction

If you have any employees that are working in a foreign country, you need to be aware of your pay as you go (PAYG) withholding obligations.

Foreign earnings that do not meet any of the exemption conditions are assessable income and subject to PAYG withholding requirements. These earnings should be included in your employee's income tax return as assessable income. They may be entitled to a foreign income tax offset for amounts of foreign tax paid.

Some payments for foreign services that relate to certain development projects, and charitable or government activities are exempt from tax - see Who is entitled to an exemption?

For more information on exempt income, refer to Exempt foreign employment income (NAT 8000).