Australian companies being stung by overseas “contractor” arrangements that look deceptively simple.
Engaging a cost effective VA, bookkeeper or developer can expose an Australian business to:
・Fair Work Act Obligations – deemed employee. (For example see Pascua v Doessel [2024] FWC 2669 and Doessel Group Pty Ltd v Joanna Pascua (C2024/7389).
・Overseas tax and compliance obligations for the worker and the Australian company. (For example see 2024 changes to the way the Philippines taxes cross-border services).
・Permanent establishment risk which can create a taxable presence in a foreign country.
・Double tax agreement complications.
Take Out Point: Companies using foreign contractors should seek legal advice before engaging them or use an overseas Employer of Record (EOR) or Business Process Outsourcing company (BPO).