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  • Foreign source earnings

    Earnings have a foreign source when the:

    • work is performed offshore and foreign tax was paid
    • business paying the person is located offshore
    • work was not incidental to work performed in Australia.

    Generally, earnings do not have a foreign source where an employee:

    • attends a conference
    • travels for work
    • undertakes the work as an incidental part of their Australian activities.

    The type of payment summary you provide your employee will be determined by whether the earnings have a foreign source or not.

    Example 1

    Kai is an accountant who goes to the USA to work with his current company's parent company. He continues to be paid by his Australian employer. Kai's duties with the foreign country are unrelated to the work that he performs for his Australian employer. Kai works with the parent company from 22 February 2016 to 16 May 2016, and during this time returns to Australia for the period 20 April to 27 April 2016.

    Although Kai is in the USA for more than 60 days, he is not there for a consecutive period of more than 60 days. Kai's Australian employer would only be required to report the earnings and amounts withheld on a PAYG payment summary – foreign employment if the employer determines that the earnings have a foreign source. Kai's employer determined the earnings had a foreign source.

    End of example


    Example 2

    Renee's Australian employer sends her to Hong Kong for two weeks to finalise an important acquisition. While in Hong Kong, Renee is offered an opportunity to stay there for a further four weeks by an affiliate company. Although this work is unrelated to her duties in Australia, her Australian employer agrees to continue to pay her as it is seen to be a good opportunity to develop Renee's professional skills and the relationship with the affiliate.

    For the initial two-week period, Renee's employer determines that her earnings do not have a foreign source, and payments made and tax withheld will be reported on the PAYG payment summary – individual non-business (NAT 0046) form.

    For the following four-week period, however, Renee's employer determines that her earnings do have a foreign source and these will need to be reported on a PAYG payment summary – foreign employment (NAT 73297).

    End of example

    See also:

      Last modified: 30 Apr 2019QC 22115