Now living in Australia but still working for an Irish employer (tax Qs)

[daveg]

Would really appreciate if someone could help us out and give us some advice on this very complicated tax situation. We moved to Australia on a 136 Skilled Migration visa 3 months ago. My wife is a software developer and was asked to continue working, from home in Australia, for her Irish employer, which she did. We have spoken to an Australian tax consultant here in Melbourne to try to sort out her tax affairs (she is paid into her Irish account at home). He knows nothing about Irish tax law so has only advised us from an Australian perspective.

His advice is for my wife is to return home once per year such that she can claim back her tax (I understand if you work out of the country for a certain period you can claim all tax paid back for that year). He had suggested this as we had mentioned my wife would like to return home once per year to visit family and she can work in her old office whilst she is home.

If she then claims all her tax back the tax consultant will do her tax return here in Australia once per year. As she will be working when she returns home once per year the Tax Consultant has also suggested her flights would be a tax deductable expense.

The other option is to envoke the tax treaty in place between Ireland and Australia. In this instance she would pass on her P60 (if I have the right document?) which will show all her tax paid that year. The tax consultant will then work out the difference she would have paid here, as an out of the country income, and she will only pay the difference, if there is a difference.

Could it be more complicated ?

Should we hire an Irish tax specialist as well or does anyone have any advice on the situation? I'm also wondering should she be claiming our full tax relief at home (as a married couple) and should I be doing the same here?

 

[podowd]

If you have left Ireland and are not going to return this year (other than a holiday) you are considered non-resident in Ireland and resident in Ireland. You would therefore be taxable in Australia, and should not be taxable in Ireland (as you are non-resident and all employment duties are being carried out overseas). I don't agree with the "returning home once a year to claim a refund" but yes, in theory it is possible to claim a refund of overpaid tax. The other option mentioned is more correct, to pass on the P60 and the Irish PAYE deducted would be credited against the australian tax liability.

However, you are incurring PRSI costs which you will not get a credit for in Australia. If it is possible to do so a less complicated way would be for your wife to be paid as a self-employed consultant (without deduction of paye/prsi) by the irish company, and then account for her taxes in Australia without any Irish tax implications (assuming you notify the Irish revenue that you are non-resident).

If you can get her employer to agree to the above you don't need an Irish accountant, but if they continue to tax her as a paye employee it would be worth getting an accountant here to ensure your irish tax affairs arre in order rather than relying on an australian accountant who is not familiar with it.

Regards

podowd
www.prima.ie

 

[Nige]

Your wife's employer should apply for a PAYE exclusion order for her on the basis that she is not Irish resident and is not performing her duties in Ireland. She can then be paid gross and, as an Australian resident, can pay her taxes there.

(this is presuming she is non-Irish resident, of course).

 

[kerr]

Hiya

Just thought I'd up this because I'm in the same situation. From what I've read of the Irish tax system, Nige is correct in applying for a PAYE exclusion.

According to the document here ([broken link removed]) it says:


4.3. I am being posted to work abroad by my Irish employer. How will my employment income be treated for tax purposes in the year that I leave?
If you are resident during the tax year you leave and you will be non resident for the following tax year you will be deemed to be non resident from the date of your departure. This means that your employment income will be exempt from Irish tax from that date. In order to avail of this arrangement (known as split year treatment) it is necessary that you satisfy your local tax office of your intention not to be resident in Ireland for the tax year following your departure. In this regard a statement from your employer or a copy of your contract of employment indicating the length of time you intend to spend working abroad should be submitted in support of your claim. The tax office will then issue what is known as a PAYE exclusion order to your employer authorising him/her not to deduct tax from your salary. An exclusion order will operate from the date of your departure and will be effective for as long as you remain non resident and the duties of your employment continue to be exercised abroad. Although you will be deemed non resident from the date of your departure you are nevertheless due full personal tax credits for the complete tax year. In those circumstances you may be entitled to a tax adjustment, taking into account
the unused portion of your tax credits (see question 4.5).


cont. below

 

[kerr]

4.5 I am going abroad and have not used up my full tax credits for the tax year in which I leave. How do I claim a refund of tax paid?

You can claim a refund of tax paid by supplying the following details to your local tax office:

• A completed claim form P50 (available from your local tax office or from our website [broken link removed] );
  
• your P45 (available from your employer if you are leaving your existing employment;
  
• A completed return of income form 11 (also available from your local tax office or from our website); and
  
• a statement to the effect that you are going to live abroad permanently or in such circumstances that you will not be resident in Ireland for at least the following tax year.

I would be interested to hear from anyone else who is in the same situation as to what you've done. Apologies about the split post - boards were giving me hassle over the list.

Cheers!