How to pay overseas contractors from Australia

Key takeaways

• Whether someone is a contractor depends on the whole working relationship, not the label in your contract – so check current ATO and Fair Work guidance before you engage anyone overseas.

• The real cost of paying an overseas contractor usually sits in the exchange rate margin, transfer fees, and any receiving fees, so compare the total amount your contractor actually receives.

• Airwallex is a global platform for paying contractors in 200+ countries and regions, with A$0 transfer fees over local payment rails in 120+ countries and FX at interbank rates plus 0.5–1%.

Hiring an overseas contractor can help you fill a skills gap, scale faster, and tap into talent across time zones – without setting up a business entity offshore.

Before you send the first payment, though, there are two things to get right: classifying the worker correctly under Australian rules, and choosing a payment method that doesn't eat into your contractor's pay (or your margins).

This guide covers both – who counts as a contractor, how to pay them step by step, and how eight popular payment options compare.

Who is an overseas ‘contractor’?

An overseas contractor is a person or business based outside Australia who provides services to your business, rather than working in your business as an employee. According to the Australian Taxation Office (ATO), the key difference is that an employee serves in your business, while an independent contractor provides services to further their own business.

Contractors can work as individuals or sole traders, or through a company, trust, or partnership. If you engage a company, trust, or partnership, the ATO treats it as a contracting arrangement for tax and super purposes.

For individual contractors, you'll need to look at the whole working arrangement. Calling someone a contractor in your agreement doesn't make them one.

Signs a worker is likely to be a contractor

The ATO looks at several indicators together. No single indicator decides the outcome, and they shouldn't be used as a tick-box checklist. A contractor will generally:

• Choose how, where, and when they work, subject to reasonable direction from you

• Be paid to achieve a specific result, often for a fixed fee, rather than for their time

• Have a genuine right in their contract to delegate or subcontract the work

• supply most of their own tools and equipment, without an allowance or reimbursement from you

• Carry the commercial risk of fixing defective work

• Build goodwill for their own business, rather than yours.

What changed for contractors in Australia in 2024

Since 26 August 2024, the Fair Work Act 2009 has included a new definition of employment. Under this "whole of relationship" test, businesses need to consider both the contract terms and how the work actually happens in practice.

The new test applies to workplace laws and is generally used by constitutionally covered businesses, such as Pty Ltd companies. It doesn't change how employment is defined for tax or super, which means a worker can be assessed differently depending on which law you're looking at.

How to pay an overseas contractor in 5 steps

Paying an overseas contractor from Australia generally comes down to five steps:

1. Confirm their status. Check ATO and Fair Work guidance to make sure the worker is genuinely a contractor, and whether any super obligations apply.

2. Put a written agreement in place. Set out the services, payment terms, currency, invoicing schedule, intellectual property ownership, dispute resolution, and governing law.

3. Collect their payment details. You'll usually need the contractor's legal name, address, preferred currency, and bank details, such as an account number and SWIFT/BIC or local routing code.

4. Choose a payment method. Compare exchange rates, transfer fees, speed, and receiving fees across providers (see the comparison below).

5. Keep records. Save contracts, invoices, and payment confirmations so you can support your tax position and classification decision if questions come up later.

Six popular platforms for paying overseas contractors compared

Here's how six popular payment platforms compare for Australian businesses paying overseas contractors. Fees and features change often, so check each provider's current pricing before you send.

Best ways to pay overseas contractors from Australia

The best way to pay an overseas contractor depends on how often you pay, how much you send, and which currencies your contractors want to be paid in. Here are eight options Australian businesses commonly use.

Airwallex

Airwallex is a global financial platform built for fast, transparent, and cost-effective international payments. It suits businesses that pay contractors regularly, in multiple currencies, or across several countries – and it works just as well for paying overseas suppliers in 200+ countries and regions.

• Low-cost transfers: Pay contractors with A$0 transfer fees over local payment rails in 120+ countries. SWIFT transfers cost A$10–A$30.

• Transparent FX: Convert at interbank rates plus 0.5% for major currencies and 1% for others.

• Fast delivery: 93% of transfers arrive the same day and 45% arrive instantly, though timing varies by destination, currency, recipient bank, and payment method.

• More control over conversions: Hold balances in your multi-currency account and choose when to convert, which can help you avoid unnecessary conversion costs.

• Local account details: Open local account details in 20+ currencies to receive funds from 70+ countries.

• Easier reconciliation: Connect to Xero, QuickBooks, and NetSuite to keep your books up to date.

Payoneer

Payoneer is a cross-border payment platform for businesses and freelancers, covering 190+ countries and territories. It has a long-standing partnership with Upwork, so many freelancers may already have an account.

• Receive funds with local receiving details in 13 currencies.

• Payments between Payoneer accounts are free.

• Paying a contractor in another country from your Payoneer balance costs up to 1% plus up to US$4.

• Funding a payment by credit card can cost up to 3.99%.

• You can hold balances in multiple currencies and convert when it suits you.

• An annual fee of US$29.95 applies if your account receives less than US$6,000 in 12 months.

Payoneer's fees vary by region, so it's worth checking your quote before you pay. It also offers Workforce Management services, including contractor management from US$19 per contractor per month.

Wise

Wise is a fintech known for multi-currency accounts and international transfers that use the mid-market exchange rate (the midpoint between the buy and sell prices of two currencies), with fees shown upfront.

• Hold and convert 49 currencies, with local account details in 22.

• Send business payments to 160+ countries.

• Transfer fees vary by currency and start from 0.19%, with discounts once you convert more than A$40,000 a month.

• There's no monthly fee, but a one-off A$65 fee applies to get local account details.

Because Wise charges a fee on each transfer, it may be worth modelling your regular contractor payments against other providers to see which works out cheaper overall.

Western Union

Western Union lets you send money for cash pickup at agent locations around the world, which can help if your contractor doesn't have easy access to a bank account.

• Cash pickup can be available within minutes in participating locations.

• You can also send to bank accounts and, in supported countries, mobile wallets.

• International transfers generally take one to five business days.

• Fees and exchange rates vary by amount, destination, and how you fund the transfer.

Western Union's Australian website focuses on personal money transfers with few business-specific tools on offer, so it may be better suited to occasional payments than regular contractor payroll.

OFX

OFX is a global payments provider offering international transfers, FX risk management tools, and multi-currency accounts, with business payments to 170+ countries in 30+ currencies.

• Local account details are available in AUD, USD, GBP, EUR, and CAD.

• Cross-border SWIFT transfers cost A$10 + GST each on the Standard and Full Suite plans.

• The Standard plan is A$0 a month; Full Suite is A$75 a month for up to five users.

• Limit Orders let you set a target exchange rate, with no additional fees beyond your usual FX transaction charges.

• Forward Contracts let you lock in a rate up to 12 months ahead.

OFX applies an FX margin to conversions, so check your live quote before booking.

International bank transfer

If your business already banks with one of the big four, an international transfer (also called a telegraphic, wire, or SWIFT transfer) is often the easiest option to set up. However, it's not always the cheapest.

• Banks typically add a margin to the exchange rate, on top of any transfer fee.

• Intermediary or receiving banks may deduct their own fees, which can reduce what your contractor receives.

• Transfers can take several business days, depending on the bank, currency, and destination.

TorFX

TorFX is a currency exchange and international payments provider that focuses on larger and regular business transfers, sending 40+ currencies to 120+ countries.

• There are no transfer fees on business payments, but an FX margin applies to the exchange rate.

• Risk management tools include spot contracts, forward contracts, limit orders, and rate alerts.

• Most major currencies arrive within one to two working days.

• Online transfers are available up to A$200,000; larger amounts go through an account manager.

TorFX doesn't offer local account details, so it's best suited to sending payments rather than receiving them.

Revolut Business

Revolut Business offers multi-currency accounts on four tiered plans, with transfers to 150+ countries in 30+ currencies.

• Plans cost A$15 (Basic), A$30 (Grow), and A$150 (Scale) a month, with Enterprise from A$1,250 a month.

• Free international transfers each month: none on Basic, five on Grow, and 25 on Scale. After that, transfers cost A$10 each.

• Currency exchange is at the interbank rate up to a monthly allowance that depends on your plan, then 0.6%. An extra 1% applies outside market hours, such as weekends.

• SWIFT transfers where you cover all fees (OUR) cost A$35 on the Basic plan.

• Transfers to other Revolut accounts are free.

What fees should you look out for when paying overseas contractors?

The biggest costs when paying overseas contractors are often built into the exchange rate rather than the transfer fee. When you compare providers, check for:

• Exchange rate margins: The gap between the rate you're offered and the interbank or mid-market rate

• Transfer fees: Flat or percentage fees per payment, and whether SWIFT costs more than local transfers

• Intermediary and receiving fees: Charges deducted by other banks along the way

• Account or plan fees: Monthly subscriptions, setup fees, or low-activity fees

• Out-of-hours surcharges: Extra markups on currency exchanges made on weekends or outside market hours.

The simplest way to compare is to look at the total amount your contractor receives for the same payment.

What are the legal requirements for paying overseas contractors from Australia?

There's no single rule that covers every overseas contractor arrangement. Your obligations depend on the worker's status, where they're based, where they were engaged, and how your business is set up. Here's what to check.

Classify the worker correctly

You're responsible for classifying your workers correctly for tax and super, and the ATO can apply penalties if you get it wrong.

Sham contracting – presenting an employment relationship as a contractor arrangement – can also attract penalties under the Fair Work Act. Since 27 February 2024, a business defending a sham contracting claim needs to show it reasonably believed the worker was a contractor.

Check whether Australian workplace laws apply

Working overseas doesn't automatically put someone outside Australian workplace laws. The Fair Work Ombudsman says an employee working overseas can still be an "Australian-based employee" – for example, if they were engaged in Australia by an Australian employer. It depends on the individual circumstances, including where the contract was formed.

Overseas workers may also have rights under the laws of the country where they work.

Put a clear contract in place

A well-written contract sets clear expectations, but it won't decide on its own whether someone is a contractor. It should cover:

• the scope of work and deliverables

• payment terms, currency, and invoicing schedule

• intellectual property ownership and confidentiality

• dispute resolution

• governing law and jurisdiction.

Understand your tax obligations

An overseas contractor who doesn't carry on a business in Australia generally doesn't need an Australian Business Number (ABN). However, the ATO says it's up to you to be satisfied you don't need their ABN, and you'll still need to check whether foreign resident withholding applies to the payment.

Do you need to pay super for overseas contractors?

Generally, no. You don't have to pay super guarantee for non-resident employees who do their work outside Australia – even if they'd otherwise count as employees for super purposes.

Super can apply in other situations, though. Under ATO rules, you may need to pay super for an individual contractor if you pay them mainly for their labour, which means:

• more than half the dollar value of the contract is for their labour

• they're paid for their personal skills and effort, not to achieve a specific result

• they must do the work themselves and can't delegate it.

This applies even if the contractor has an ABN. You don't need to pay super for the person doing the work if you contract with a company, trust, or partnership.

If super does apply – which may be the case for an Australian resident contractor working temporarily overseas – the super guarantee rate is 12%, and from 1 July 2026 you'll need to pay it each payday.

Why businesses use Airwallex to pay overseas contractors

For global teams, Airwallex is more than a money transfer service. It brings international payments, multi-currency accounts, and spend management together in one place, so you can pay contractors and manage costs without juggling multiple providers.

• Pay contractors in 200+ countries and regions, with A$0 transfer fees over local payment rails in 120+ countries.

• Keep FX costs transparent, with interbank rates plus 0.5% for major currencies and 1% for others.

• Receive and hold foreign currency with local account details in 20+ currencies, then pay from the same balance to help avoid unnecessary conversions.

• Manage team spending with multi-currency Corporate Cards, including virtual cards, plus spend controls and accounting integrations.

"We have contractors based in China, the US, and Europe, and our Airwallex Global Account enables us to make global payments from one simple portal." – Richard Li, Co-founder and CEO, July

Frequently asked questions

How do I legally pay overseas contractors from Australia?

To pay an overseas contractor legally, make sure they're genuinely a contractor under ATO and Fair Work guidance, put a written agreement in place, and check your tax and super obligations before you pay. Contractor rules changed in 2024, so it's worth getting advice for your specific arrangement.

What's the cheapest way to pay an overseas contractor?

The cheapest way to pay an overseas contractor is usually a provider that offers a low exchange rate margin and low or no fees on local transfers. Compare the total amount your contractor receives – including FX margins, transfer fees, and receiving fees – rather than the headline fee alone.

My contractor wants to be paid in their local currency. What should I do?

You can pay a contractor in their local currency through a provider that supports that currency and country. With Airwallex, you can pay out over local payment rails in 120+ countries with A$0 transfer fees, and hold foreign currency balances so you can pay from the same currency without converting each time. Availability depends on the currency and destination.

Why use a payment provider instead of my bank for international payments?

Banks can be convenient, but international bank transfers often include an exchange rate margin, and intermediary banks may deduct extra fees along the way. If your business pays contractors or suppliers overseas regularly, a provider like Airwallex can help you reduce FX costs, pay over local rails, and manage multiple currencies in one account.

Do I need to withhold tax when paying an overseas contractor?

Usually not, if your contractor is a foreign resident who doesn't carry on a business in Australia. However, foreign resident withholding can apply to some types of payments, so check ATO guidance or speak to a tax adviser for your situation.

Sources

• https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/employee-or-independent-contractor/difference-between-employees-and-independent-contractors 

• https://www.ato.gov.au/businesses-and-organisations/super-for-employers/work-out-if-you-have-to-pay-super/super-for-independent-contractors 

• https://www.ato.gov.au/businesses-and-organisations/super-for-employers/work-out-if-you-have-to-pay-super

• https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/income/withholding-from-a-foreign-resident

• https://www.fairwork.gov.au/about-us/workplace-laws/legislation-changes/closing-loopholes/independent-contractor-changes

• https://www.fairwork.gov.au/tools-and-resources/library/K600417_Employees-working-overseas

• https://www.payoneer.com/fees

• https://www.payoneer.com/workforce-management/

• https://wise.com/au/pricing/business

• https://wise.com/au/business/send-payments

• https://www.ofx.com/en-au/business/pricing/

• https://www.ofx.com/en-au/business/fx-solutions/limit-orders/

• https://www.ofx.com/en-au/business/fx-solutions/forward-contracts/

• https://www.torfx.com.au/international-business-payments

• https://www.revolut.com/en-AU/business/business-account-plans/

• https://www.revolut.com/en-AU/legal/business-basic-fees/

• https://www.westernunion.com/au/en/send-money.html