The government in their May budget announced the removal of this much utilised section of the 1936 Act which allowed for employment income of outbound expatriates to be exempt from Australian tax. This paper explores these amendments and the impact they will have on employees and employers.
The taxation impact on employers include PAYG, pay-roll tax and superannuation obligations and increased FBT costs. Given the changes employers will also face a loss of international competitiveness, increased assignment costs and reduced ability to attract employees on overseas assignments.
Employees will face greater issues such as double tax and the associated cashflow concerns. Accordingly, this paper also explores the alternatives available including the use of foreign income tax offsets and the use of double tax agreements.