Travel and Tax. You generally pay tax where you earn the money. You lodge an annual Tax Return – nothing new there. But what if you travel to another country and work there?
Don’t travel and not consider the tax implications. Listen up – if you’re traveling on a Tourist Visa, you don’t pay any tax in that country because you’re not allowed to work.
Any work that you do online will have to remain in the Non-Work arena. Savvy?
Any money that you receive from that work should go into your bank account in your home country. All good so far. When you get back from your trip you’ll lodge a Tax Return as usual.
As long as you travel under a Tourist Visa, you’re not earning any money in the country you’re visiting so you won’t have to declare any online earnings or lodge a Tax Return in the country you’re visiting.
If you’re visiting a country using a Work Visa, you will have to declare the earnings you made whilst there. The general rule is that you pay tax where you earn it. Under this scenario you’re still a citizen or resident of your home country so what do you do?
  1. You lodge and pay tax in the country in which you earned the money [before you leave, generally] and
  2. You lodge a Tax Return in your home country and apply for an Exemption from Double Taxation.
This only works in countries where your home country has that particular Tax Provision (part of its Tax Law).
If it doesn’t have a Double Taxation Relief provision you probably will be subject to be taxed on all income earned that year whether at home or abroad. Bummer, not good.
How do you avoid this awful situation? You do your homework before you leave, that’s how.
It gets a bit hairy if you live an extended amount of time away from home if you’re an Australian. (more on other nashos if this blog is successful)
A lot of Australians live and work (online) in Thailand. I’m not going to go into the Visa situation (not the credit card, the Entry Visa) at all here. You can figure that out without me!
If you spend enough time out of Australia, the Tax Office in Australia will probably try to declare you a non-resident for Tax Purposes, meaning you will pay alot more tax when you lodge your annual Tax Return in Australia than if you were a Resident for Tax Purposes. This doesn’t mean you have agree with them, you can fight the ATO, happens all the time. [they might not insist on this but if they do, remember I said this] or better still contact me – I’m an accountant after all.
A scenario I came across recently was a Brit who’d moved to sunny Portugal to live the Laptop Life. The tax system in Portugal is pretty awful but she didn’t know anything about it, didn’t do her research before she left, now she’s moving back to the UK – something she didn’t plan on doing (after taking her dogs with her which makes it doubly messy with quarantine issues etc).
Don’t get caught out. Start with Google. Google is your friend. Disregard anything written before 2016 and get some formal Tax Advice. It doesn’t cost a fortune and if you don’t hear what you think you should be hearing, get a second, third opinion [and get it in writing, you’re paying for it!].
Happy Tax Trails 😉