Visiting Fellows and Visiting Scholars Program Financial Advice (June 2018)

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1 Visiting Fellows and Visiting Scholars Program Financial Advice (June 2018) 1 Introduction It is very important that the budget you present as part of the nomination materials for a University of Tasmania Visiting Fellow or Visiting Scholar Program nominee is both realistic and complete. This advice is provided by Financial Services in order to help you to estimate expenditure and understand the tax implications involved in a visit. Although the relationship between a Visiting Fellow or Visiting Scholar and the University of Tasmania does not constitute an employment relationship, the relationship may be considered to be an employment relationship for taxation purposes by the Australian Taxation Office. Payments that are made for activities such as research, thesis supervision, mentoring, guest lecturing, public lectures, workshops and short course and summer school teaching, will have taxation and other implications. 2 Travel Arrangements The University s Travel Procedure requires that visitors travel paid by the University, including inbound flights, are arranged in accordance with the Travel Policy and Travel Procedure. Please see for full policy and procedure guidance. 3 Income Tax Visiting Fellows and Visiting Scholars Residents of Australia Any remuneration paid to Visiting Fellows and Visiting Scholars that are residents of Australia will be subject to income tax at the relevant fortnightly tax rate (if a Tax File Number (TFN) has been submitted). Should the Visiting Fellow or Visiting Scholar elect to have their home University invoice the University of Tasmania, the payment will be subject to GST and may be exempt from Income Tax depending on how the home University distributes the funds (e.g. consultancy funds used for professional development). Visiting Fellows and Visiting Scholars Non-Residents of Australia It is important to ensure that overseas Visiting Fellows and Visiting Scholars enter Australia on the appropriate visa, as some visas do not allow payments which are considered to be remuneration and allow only for payments which are intended to cover living expenses while in Australia. Please consult with your HR Advisor or Business Partner regarding appropriate visas. Payments for personal services (including honorariums) paid to Visiting Fellows and Scholars that are non-residents of Australia will be subject to income tax at non- 1

2 resident tax rates, unless they are covered by a specific exemption provided in a Double Tax Agreement (DTA) that Australia has with the visitor s home country (where they are resident for taxation purposes). Some DTAs have specific provisions governing the taxation of visiting academics. To qualify for tax exemption under such provisions, the visitor must satisfy the criteria set out in the applicable DTA. While the criteria set out in each DTA differs, the following can be used as a guide: The visitor (Professor or teacher), for the purpose of teaching or carrying out advanced study or research at an Australian educational institution, for a period not exceeding 2 years; The visitor (Independent contractor), providing professional services or other activities of an independent character, does not have a fixed base regularly available at an Australian educational institution and does not exceed period specified in DTAs; The visitor is a resident of their home country (i.e. the country where they are resident for taxation purposes) immediately before their visit to Australia. Where a DTA is applicable the University will require a declaration from the Visiting Fellows and Visiting Scholars attesting to the details of the DTA status. Where a DTA is not applicable, non-resident Visiting Fellows and Visiting Scholars may be required to obtain and provide a tax file number, and complete an ATO Tax File Number Declaration otherwise they may be paying tax on remuneration for services at the highest tax rate. 4 Payroll Tax The University of Tasmania will be required to pay payroll tax on the full amount of remuneration paid to a Visiting Fellow or Visiting Scholar. The current rate of payroll tax applicable is 6.68%. 5 Superannuation Where a Visiting Fellow or Visiting Scholar receives payment for personal services, they will be considered an employee for the purpose of the superannuation guarantee legislation and superannuation will be levied on the visitor s payment at the applicable rate (currently 9.5%). Persons who have entered Australia on an eligible temporary residents visa and who permanently depart Australia are able to receive payment of any superannuation they have accumulated under strict conditions. 6 Workers Compensation Remuneration will also be subject to a workers compensation on-cost, which is currently set at 0.3%. 2

3 7 Miscellaneous It is recommended that international visiting fellows and visiting scholars who receive payment for personal services establish an Australian bank account. Alternatively, it can be requested that a manual transfer be made into an international bank account, this will be at the exchange rate applicable at the time of the transfer. The visitor will bear any exchange rate movement/costs. The payment should be received within five working days after the official pay day. 8 Expense Payments Visitors for up to 90 days Visitors for up to 90 days are treated as travellers which allows the University to provide a travel allowance. Allowance amounts or expense reimbursements on presentation of receipts from the visitor should be based on the below rates which the Australian Tax Office consider to be reasonable. No other travel expenses will be reimbursed where a visitor receives an allowance. Food made up as follows: Breakfast Lunch Dinner $ $27.05 $30.45 $51.85 Food component should be reduced accordingly where it is intended to provide a catered meal as part of meetings or events including welcome or farewell lunches or dinners Reasonable accommodation costs will be to be paid directly to the supplier or reimbursed to the visitor on receipt of supporting documentation. Reasonable will be determined by the length of stay. Visitors over 90 days Reimbursement amounts and taxation implications for visitors over 90 days will need to be determined on a case by case basis. Please include the following details in the application: If the visitor s family in attendance or not If the visitor will receive rental income on family home while in Australia Accommodation and food reimbursement requested Food reimbursements should not exceed $ per week. Reasonable accommodation costs will be to be paid directly to the supplier or reimbursed to the visitor on receipt of supporting documentation. Reasonable will be determined on the status of the visitor, number of residing persons, location and whether the accommodation is furnished. 3

4 9 No Private Use Declaration All visitors for which travel costs including airfares, accommodation or food are paid or reimbursed are required to complete a No Private Use declaration on arrival, and a copy should be attached to relevant payments. No Private Use Declaration is attached below. 10 Contact If you have any further questions regarding the remuneration or living expenditure of your Visiting Fellows and Visiting Scholars Program nominee, please contact: Emma Bates, Financial Reporting Manager Qian Lu, Financial Accountant Financial.Reporting@utas.edu.au 4

5 Appendix 1 Tax treaties (Double Tax Agreement) Australia has Double Tax Agreement (DTA) with more than 40 countries. Countries have Double Tax Agreement (DTA) with Australia and have Independent Personal Services or Professors and Teachers clauses, their visitors are eligible to be exempt from Australian income tax for any remuneration by providing teaching or carrying out advanced study or research or other professional services for a period not exceeding specified in DTAs. Where a country has DTA with Australia however does not have the Independent Personal Services or Professors and Teachers clause and the visitor is in Australia, income tax will be payable on remuneration at non-resident tax rates unless exempted under another provision. DTAs and tax law are regularly being revised. Please contact the Financial Reporting Team for the current status of your prospective visitor s country tax relationship with Australia. Notes: 1. The term 'professional services' includes, inter alia, independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. These services must be 'independent' in nature. 2. The term Fixed base would generally refer to an office (i.e. by contrast to a desk shares or similar) where a person has sole use a permanent basis. 3. Remuneration for conducting research is not exempt if the research is undertaken primarily for the private benefit of a specific person or persons. 5

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