How to pay overseas contractors and employees from Australia?
As your business grows and you expand your team, you may find yourself employing individuals or working with contractors from outside of Australia. In some situations, you may be saving costs for your business by doing this.
However, hiring overseas contractors and employees isn’t without challenges. One of the main ones is figuring out how to pay them. You want to be aware of all the factors and steps involved before you pick an option to help you in paying overseas contractors from Australia.
Who are overseas contractors and employees?
Any individual or entity that is located outside of Australia recruited by your business is considered an overseas contractor or employee. They are not considered Australian residents and may have different tax guidelines from those who are.
While both overseas contractors and employees work with your business, there are differences that you need to be aware of to make sure that you are paying overseas contractors from Australia correctly.
Overseas employees are those who work for and serve your business, while contractors are not part of your business and instead offer their services as a way of doing business themselves.
Factors to consider while paying overseas employees or contractors
1. Taxes involved
Keep in mind that if you are an Australian business, any individual that you recruit to work for your company for more than 60 days will require you to adhere to the Australian taxation obligations.
Regardless of where your employees are, so long as the business and employer are Australian, it’s mandatory that you follow money transfer guidelines.
There are 3 different tax payment scenarios for overseas contractors and employees, starting with tax payments for Australian residents who are overseas, tax payments for non-Australian residents, and tax payments for independent contractors or freelancers overseas.
Be sure that you are aware of which your contractors and employees fall into and what each scenario entails.
2. Superannuation
Australian businesses don’t have superannuation obligations for overseas contractors or foreign national employees.
However, if you have employees who are residents of Australia for tax purposes but work overseas, then you have superannuation obligations that you must fulfill.
In a case where your Australian employee leaves to work for your business overseas, you will also be required to get a certificate of coverage from the Australian Taxation Office before your employee leaves the country.
3. Procedures to transfer money overseas
Once you have considered taxes and superannuation and ensured that you’re in compliance with all the Australian taxation laws, you’ll need to figure out how you’ll be paying contractors and employees who are overseas.
Before even making payments, you need to make sure that you know if there are requirements or not.
For example, for foreign resident employees, you’ll need to provide a pay-as-you-go (PAYG) payment summary — foreign employment (NAT 73297), which details their income during foreign employment and the tax withheld and paid to a foreign government.
Be sure to fill in all necessary documents along with making your payment. For paying overseas contractors from Australia, there are many currency transfer services that you can choose from to convert money and pay your overseas contractors and employees in foreign currencies.
When you are looking for currency transfer services, you want to consider things like convenience, processing time, and transfer fees to get the best way to pay contractors from Australia.
Fees, especially, can easily add up over time. With many overseas contractors and employees to pay, you want to get the lowest fees and FX rates, which will save you a lot of money.
Worry less to make international business payments
What are the different options to pay overseas employees or contractors?
1. Payoneer
Payoneer is a digital payment service that enables Australian businesses to send money overseas to contractors and employees.
With Payoneer, you can send money to over 190 countries easily. Your recipients don’t need a Payoneer account to be able to receive the money—allowing you to send money directly to their bank accounts.
Once you have made a Payoneer account, paying overseas contractors from Australia is easy.
Payoneer also lets you make batch payments to take care of paying multiple contractors and employees at once. Just be aware that transferring money to a bank account instead of a Payoneer account can take a few days to process.
2. Volopay
With Volopay, you can get a business bank account that lets you hold multiple currencies, making paying overseas contractors from Australia much easier.
You can pay contractors and employees in over 180 countries in just a few clicks without needing to go to a bank branch.
Payments will be sent straight to your contractors and employees’ bank accounts. Keep all bank account details saved on the Volopay platform, making future payments easy to do without having to reenter the recipient’s information every single time.
For recurring payments like employee salary, you can schedule monthly transfers to make sure that your payments to overseas recipients are sent on time.
3. Paypal Australia
Paypal is a payment platform that businesses can use to both send and receive payments. Paying overseas contractors from Australia through Paypal is fairly simple.
Once you have an Australian Paypal Business account, you can simply log into your account and send payments by entering your contractor or employee’s email address or phone number and entering the amount you wish to pay.
You can send money from Paypal through various sources, such as your Paypal account or a linked business bank account, or a credit card.
However, one thing that you need to keep in mind if you’re thinking of using Paypal Australia for paying contractors is that you can only send funds to other Paypal accounts.
4. Western Union
You can send money internationally to pay your overseas contractors and employees through an online app or an agent with Western Union.
To make your payments through an agent, you’ll have to visit a Western Union kiosk and speak to an agent to get the transfer done.
However, you could also create an account online and input your contractor’s details, the amount owed, and the payment method to do it from anywhere.
You can send funds to over 200 countries with Western Union, but keep in mind that there are no standardized costs. Paying through different channels or branches can result in different exchange rates and fees.
5. Airwallex
As a financial technology company that does global payments, Airwallex offers businesses online business accounts that can be used for paying overseas contractors from Australia.
You get various options and features, including global payment cards. To make a transfer to an overseas contractor or employee with Airwallex, you can use the Transfers feature.
You’ll then be required to create a contact for the particular contractor or employee if you don’t have them saved on your list yet.
After selecting your fund source and transfer method, you’ll then be able to go ahead with the payment and complete the transfer. Airwallex has 40+ currencies that you can choose to pay in.
6. Bank transfer
While there are many payment technology companies that offer different ways to pay your overseas contractors and employees, it’s also possible to make international transfers with your business banking partner.
If you have a business bank account with an Australian bank, it’s natural to consider this as a first option.
Most Australian banks nowadays will have an online banking portal that you can access to input the recipient’s details and transfer funds to them via SWIFT.
You also have the option to go to a branch and get assistance for your transfer. The downside to bank transfers is that they’re likely more expensive and can take a while.
Volopay business accounts for all your business payments
Make paying overseas contractors from Australia easy with Volopay. There’s no need to stress over long wait times or expensive FX rates for international transfers. Managing, creating, and tracking your payments can all happen on one platform.
Get access to a business account with multi-currency wallets to load, hold, and spend in various currencies. You can hold money in AUD, USD, GBP, EUR, SGD, and many more.
Not only can you use it to make vendor payments, —domestically and internationally—but paying contractors and employees from many different countries will also be easy. Make payments to over 180 countries with Volopay.
To make things better, your accounts payable and accounting can be streamlined by using a Volopay business account.
Every contractor payment and employee salary payout will be recorded on your ledger with Volopay. Automated accounting integrations ensure that you can easily reconcile your accounts and close your books faster.
Volopay allows you to simplify every step of your payment process when paying overseas contractors and employees.
From keeping their bank account details to making payments to managing your books, you’ll be able to automate your processes and cut down the time and costs it would otherwise take you.
You can confidently recruit overseas contractors and employees to scale your business while minimizing your costs. Make the most of your opportunities to expand globally and let Volopay take care of paying overseas contractors from Australia.
All-in-one solution for business payments
FAQs
Yes. While you have to make sure that you’re considering all the factors and steps involved, you can figure out the best way to pay overseas contractors from Australia and do it. There are many transfer options available to make this happen.
Paying overseas contractors from Australia with Volopay is hassle-free. When you have a Volopay business account, you can make payments to any overseas contractors and employees through the Volopay web dashboard in just a few clicks.
With SWIFT, you can make international payments with Volopay and allow your overseas contractors and employees to receive money in less than 3 days.
Yes. You can add funds to your Volopay account and hold money in AUD, USD, EUR, GBP, SGD, and many more currencies. This makes paying overseas contractors from Australia much easier, allowing you to bypass expensive FX rates.
As contractors are defined differently from employees, your overseas contractors are responsible for paying their own taxes. However, you must be aware of tax obligations for any foreign employees.
Yes. Australian residents who work overseas must file their tax return and declare their foreign employment income, including any exempt income.