Secondments to Australia are a common feature of global mobility programmes, particularly for organisations expanding into the Asia-Pacific region. While the commercial benefits are clear, Australia’s regulatory framework introduces several compliance and cost considerations that differ from the UK and Europe.
Without early planning, employers may face unexpected tax exposure, reporting obligations and increased assignment costs.
Immigration and Right to Work
Securing the correct immigration status is a fundamental first step. Employees must hold an appropriate visa before undertaking any work in Australia, and employers should be aware that sponsorship carries ongoing compliance obligations.
Visa selection will depend on the duration and purpose of the assignment, but it can also influence how the secondment is structured from a tax perspective. In practice, employers should ensure they are comfortable with:
As Steph Smith, Head of Global Mobility at activpayroll, explains: “The key to successful secondments to Australia is early planning.
Payroll Tax, State-Based Employment Tax
Australia’s payroll tax system operates at state level, with varying thresholds and rates depending on where the employee performs their duties. This can create complexity for international employers unfamiliar with decentralised employment taxes.
Payroll tax can apply even where employees remain on an overseas payroll, as the location of the services performed is a key factor. When assessing exposure, employers should consider:
Income Tax, Employee and Employer Obligations
Australia’s income tax regime requires careful consideration of both employee and employer obligations. Tax residency is determined using a multi-factor approach, and employees may become resident sooner than anticipated, bringing worldwide income into scope.
From an employer perspective, PAYG withholding can arise even where the employee is paid offshore, often requiring the operation of a shadow payroll. Double Tax Agreements may provide relief, but only where specific conditions are met, and these should be reviewed alongside any permanent establishment considerations.
This typically involves reviewing:
Social Security Considerations
Although Australia does not operate a traditional social security system, coordination between jurisdictions remains important. Totalisation agreements can help prevent dual contributions, including between Australia and the UK.
To apply these correctly, employers should ensure:
Superannuation, Critical for Secondees
Superannuation is a mandatory employer obligation and a key cost of Australian assignments. It operates separately from income tax and must be managed alongside payroll compliance.
Employers are generally required to contribute a percentage of ordinary time earnings to a complying superannuation fund under the Superannuation Guarantee regime.
Superannuation contribution = ordinary time earnings × SG rate
The SG rate is legislated to reach 12 percent, with contributions payable quarterly. Where no social security exemption applies, contributions are typically required even if the employee remains on an overseas payroll.
In practice, this means employers need to account for:
Structuring the Secondment
How the secondment is structured will directly influence tax exposure and compliance requirements. Employers should ensure that the legal and economic employer positions are clearly defined, and that any cost recharge arrangements are aligned with the intended tax treatment.
Early alignment between HR, tax, and legal teams helps avoid inconsistencies and unintended consequences. This will usually involve confirming:
Practical Risk Areas
In practice, risk often arises from assumptions based on home country rules. Australian requirements, particularly around payroll tax and superannuation, are frequently underestimated.
Conclusion
Secondments to Australia offer clear commercial benefits but require careful planning. Taking a proactive and coordinated approach helps ensure obligations are understood early and managed consistently throughout the assignment lifecycle.
Get in touch with activpayroll’s Global Mobility team to navigate the complexities of Australian tax, payroll, and superannuation with confidence.