Understanding the finances of your international workforce

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For Australian employers there are many considerations to be taken into account when employing people from overseas. One that may not be so obvious is understanding the financial circumstances of these employees with international backgrounds.

For example, did you know that many international employees may have loved ones living overseas with a financial responsibility to regularly send a proportion of their earnings back home? This financial assistance, known as ‘remittances’ supports their loved ones with daily living expenses like paying for rent, utilities, groceries, health and education.

This following article outlines some of these considerations and the role you can play as an employer to support your employees.

Global Remittances

Remittances are an essential source of income for millions of families around the world and remitters play a key role in the social and economic development of their countries.

In 2019, global remittances reached a record US$554 billion and they are instrumental in many countries. For example, personal remittances received in Nepal made up over a quarter of the country’s GDP in 2019. In the Philippines, it is a well-established cultural practice to head overseas to work. In fact, 2.2 million, at any time, of these overseas Filipino workers are engaged in industries as diverse as healthcare to seafaring. From Australia, both India and China are also substantial recipients of remittances. Many remitters will see their remittance as a non-negotiable financial commitment, in the same vein as Australians might regard their mortgage payment. Behaviour varies, but many remitters will send money home as many as four times a month. 

Financial Access

Like all employees, migrants working in Australia require an Australian bank account to receive their salary. Fortunately, unlike other countries, it is very easy to set up, with the ability to apply for one online regardless of location, with many free or low-cost options. 

However, for recent arrivals to Australia, applying for credit cards is not as simple. Banks will usually require some credit history here in Australia before granting even a small credit limit. This can place a credit card off limits for new arrivals, which can be a source of frustration for migrants who have enjoyed well established financial affairs in their original home country.

Tax and Super

The rules relating to taxation and superannuation are complex, and vary according to the individual circumstances of your employees. 

In general, many people from overseas who have worked and earned super while visiting Australia on a temporary visa, can apply to have their super paid to them as a departing Australia superannuation payment (DASP) after they leave.

On tax, as long as foreign residents have earned more than $1 in Australia during the financial year they can choose to lodge a tax return. This lodgement can even be done online in your employees’ home countries after they depart. If your employees are leaving Australia permanently, they may be eligible to lodge an Australian tax return early. In this instance the process is offline and is known to  take longer.

The monies received from a superannuation payment or a tax refund, regardless of amount, is highly valued as an extra boost of financial support for when your international employees are returning to their home country.

What can you do as an employer

Understanding the unique financial considerations of your international and migrant workforce is a great first step, but there are also a few practical ways you can help:

  • Sending money home: For remitters, maximising the amount their friends and family receive whilst ensuring the security of the transfers is paramount. Due to lack of awareness, many new arrivals will default to using their bank to transfer money home. However, the Australian Government (in the ACCC’s 2019 report) expressly highlighted that using digital non-bank alternatives, such as WorldRemit, can be a cheaper and faster way to send money home. Also, for employees who are working in remote locations, the fact that these services are fully digital means they can be accessed from a smartphone at any time (without having to visit a bank branch or agent location). Helping make your employees aware of these alternatives, can ensure their families and friends are receiving the greatest amount possible by way of remittances without delay.
  • Financial access: As employees establish themselves in Australia, you may find they come to you more frequently than others for proof of income or employment, as they navigate the likes of housing and credit applications. Bear in mind your company expenses policy, where they require employees to front large expenses before being reimbursed, may be unduly burdensome (or not possible) for new arrivals who don’t have a credit card.
  • Tax and Super: Each individual is different so the best thing you can do is direct your employees to the ATO website, which has extensive resources relating to international tax and access to superannuation. The ATO guidance suggests that employees check with their employer before they depart to make sure that all super contributions have been paid – so don’t be surprised if you receive these sorts of queries from your team.

WorldRemit is currently offering the first three transfers free to all Flare users. You can access WorldRemit through the Flare employee benefits portal.

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