At a glance
- A new model for expat career opportunities is starting to emerge as international borders begin to reopen after nearly two years.
- As more and more professionals consider international opportunities, there is a growing call for practical advice on international recruitment and the associated legal and tax considerations.
By Megan Breen
With most international borders now reopened, workers are officially on the move again.
Those with aspirations of working in another country who found their career plans put on hold for close to two years due to the pandemic are starting to revisit those global opportunities as businesses open their doors to international talent once again.
While the traditional paths to work in an overseas office of a large corporation are starting to return, there is also a new expat model on the horizon. Many workers are starting to take advantage of the flexibility remote working brought during lockdowns and are looking for opportunities outside the traditional expat experience.
Others look forward to the chance to move back to their home country and see family after being separated for the past two years.
Whatever the reason for this surge in global mobility, there are some requirements to meet that call for professional advice. What is the role of the accountant when it comes to living the digital nomad expat life, or when advising clients who are returning home after years overseas, or those looking to recruit international talent?
Recruiting from afar
Research from Robert Half shows 71 per cent of Australian employers intend to hire international talent on a permanent basis this year, because they cannot find the skills locally.
That’s not surprising when you consider international borders were shut for close to two years, creating a glaring shortage of skilled migrants and people on working holidays in the labour market.
To fill the gaps, employers are looking overseas, says Nicole Gorton, director at specialist recruiters Robert Half. Before doing so, however, she advises employers to seek professional advice on the immigration requirements.
“It would be wise for anybody who's looking to hire people from abroad to check the visa rights of that person. Do they have an appropriate working visa? If they need sponsorship, are they able to sponsor the person? What is the criteria to be able to sponsor that individual?,” she says.
International remote working
The research also shows that a further 60 per cent of Australian employers expect to lose local talent to international opportunities this year.
Gorton suggests there are ways for employers to manage this kind of movement to ensure they can retain people. Rather than letting people go, offering people the opportunity to keep their job with some flexibility factored in can be a good solution in a talent-short market.
“I think companies need to get a little bit creative on how they can retain someone in the organisation. Rather than expecting an employee to resign because they want to go overseas, employers could be looking at it differently and offering extended leave, or the opportunity to perform some of the role from a different location because they know how difficult it is for that person to be replaced,” says Gorton.
While it might sound easy enough to do, and the world has rapidly embraced digital tools to keep the wheels of business turning, there are some logistics that need to be considered when it comes to international remote working.
Firstly, when an employer announces that all roles come with flexibillity and remote working can be done from anywhere, does that mean literally anywhere in the world, or are there restrictions? Is it applicable only within a given country due to compliance issues? Is the arrangement temporary or permanent?
The first thing to be aware of is making sure you have everything in place before switching from resident to non-resident in order to manage what income is declared in the Australian tax return, says Grant Keating FCPA, senior accountant at Expat Taxes.
“A number of people are unaware of the tax benefits from non-resident status and in fact what they need to declare in their Australian tax return.
We have seen many people run into trouble because they didn’t put a tax return in while they were working elsewhere and pay their HECS [Higher Education Contribution Scheme] or HELP [Higher Education Loan Program] debt based on the income they were earning, for example,” says Keating.
For employers, Keating offers some clear advice. Have a conversation with an experienced accountant to understand the compliance issues for you as an employer, and for your employee, considering both Australia and the overseas country’s requirements.
“It’s not as simple as allowing your employee to move overseas and you continue to withhold PAYG and pay superannuation on their behalf. In some (but not all) cases, employers simply will not have the same obligations for remote employees as they do for local employees.
“There are also issues to consider in the overseas country, for example permanent establishment issues, local payroll obligations and more. It’s therefore important to seek advice from specialist accountants beforehand, or risk making costly mistakes,” says Keating.
“In recent years we’ve been required to amend a lot of clients’ tax returns and lodge objections on their behalf, because their Australian employers incorrectly withheld tax from their salaries in Australia, the result being that not only was tax paid in Australia (incorrectly), but often the overseas country will also demand payment for the tax on a client’s income.”
The best way for employers and employees to avoid these and other issues is to consider whether the current employment contract and employment arrangements will remain suitable, and, secondly, to always seek advice from accountants who specialise in expatriate tax/global mobility of employees.
Joanne Alilovic, employment lawyer and director at 3D HR Legal agrees, and says putting it in the too hard basket is not the best approach.
“I've had clients tell me they have an employee who's decided to move to New Zealand for six months, and they decided they’d just keep doing everything remotely. My view was that you need to get tax advice in that arrangement, and you need to check the visa arrangements also.
“A lot of employers seem to think they don't need to worry about that or that it seems too hard. Employers really need to make sure that they’ve looked into it and done it appropriately with the right advice,” says Alilovic.
Aysegul Kayahan, founder and principal at Relocation Specialists, says this situation is coming up more and more and that businesses who don’t seek advice could be at risk.
“Traditional assignment employers (that are multinationals) do take responsibility in relation to tax considerations and immigration because they sponsor their employees from other countries – but if someone is being hired by a local company, they may not have done the groundwork.
“For businesses that don't have a corporate structure in another country, there are exposures for their firm if they allow their employees to work in those countries. The employees need to have very clear guidelines given to them by their employer’s tax accountants; otherwise that employer will be exposed,” Kayahan says.
Kayahan also advises both employers and employees to do their research when considering relocating.
“One of the first things I do is encourage people to see an accountant to discuss their tax situation in terms of where they've been and where they're going. You need to be clear on residency status and what your obligations are for paying tax on property and other assets or income streams, for example.”
Kris Fothergill FCPA is an old hand at working outside of Australia, and has some advice to share with anyone considering relocating to another country, or in his case, the high seas.
In 2019, Fothergill, along with his wife and four children packed up their home in Queensland and literally set sail for a long planned sabbatical aboard a 51-foot Dufour Gib Sea yacht.
Three years later they've just sailed into New York, after waiting out COVID-19 off the coast of New Zealand and then Fiji, before making their way through Central America and up to Canada to stay ahead of the hurricanes that gather over the Caribbean from June to October.
Throughout the adventure, Fothergill has continued to run his accounting firm DIAGNO Accountants from the yacht. It is fair to say the sabbatical has worked out very well so far, he says, and that is largely down to having an “awesome team” on the ground in Australia.
Fothergill also says there are some crucial steps to take before uprooting your life and transplanting it for any period.
“Accountants and lawyers can help with people planning to work elsewhere. They can ask the important questions: Do you plan to return to Australia? How long are you planning to be out of the country for? Are you still registered to vote? Do you still have private healthcare? Where's your mail going? Where will you be paying tax? All of these things need to be taken into consideration,” he says.
For Fothergill, the tax issue raises some more questions.
“If you are doing the digital nomad thing and you don't necessarily have a fixed address, the question is which country is going to put their hand out, and which one should you actually be paying the tax to?
“For us, our last fixed address was in Australia, so that is where we pay tax. It’s worth doing the research and letting your clients or your own employees know what the tax implications are,” he says.
“There is no rule of thumb that says if you're out of the country for more than a certain amount of days in a year, then you're a non-resident for tax purposes in Australia. It's not that clear cut. There are a number of tests and each of those elements need to be taken into consideration.
What about those contemplating a life on the road, or the oceans?
“My number one piece of advice is to seek professional advice that pertains directly to your situation before you go. Just because a colleague or a friend has been given advice that relates to them, it doesn't mean that it will be the same for you.
The market for talent
- 71 per cent of Australian business leaders plan to hire international talent on a permanent basis in 2022 and 61 per cent are planning to recruit internationals on a contract basis.
- 60 per cent say there're expecting to lose local talent to international opportunities this year.
- 73 per cent say they’re likely to hire international talent to relocate and work in Australia, and 68 per cent are likely to hire international talent to work remotely.
- 40 per cent say they are planning to increase the initially planned starting salary for new recruits from overseas.
Skills in demand
Financial management: 49%
Financial/Business analysis: 48%
Internal audit: 36%
Source: Robert Half’s survey of 100 CFOs on skills they rely on international talent for.