# E3 Visa Holder: Continue AU Online Business?



## elrodur (Dec 7, 2015)

I've done a fair bit of digging on this but can't find a concrete (read: trustworthy!) answer that applies.

Scenario:

- E3 visa holder working in the US.
- Have an existing online business associated with an ABN

Is it possible to continue operating that business? I understand that income from the business should be declared/taxed in the US (and should not also be taxed in AU), but want to ensure that operating that business won't be in conflict with the requirements of the E3 visa.

Somewhat related: can a spouse on an E3D continue to operate their own Australian business, prior to an approved EAD? I'm presuming the answer to this is 'no', but there's also a lack of clarity about whether they can continue to operate it while the EAD is being processed. I'd rather avoid engaging in anything that isn't clearly defined in the USCIS regulations.


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## BBCWatcher (Dec 28, 2012)

elrodur said:


> Is it possible to continue operating that business?


Assuming the Australian government doesn't have a problem with that, sure. Assuming you have permission to work in the U.S., the U.S. government has no problem with that to my knowledge.



> I understand that income from the business should be declared/taxed in the US (and should not also be taxed in AU)....


No, not quite. Or at least it could be slightly different.

On the U.S. side the tax treatment depends on whether the business is a separate entity from which you derive income (dividends, royalties, salary, etc.) or a "disregarded entity" treated as part of your own personal income. Either way you'll be subject to U.S. tax on the income, but the form (and possibly rate) will vary. You may also be subject to Australian tax. In that event, one country should be "primary," and then you would still pay tax in the other country but also be allowed a foreign tax credit. (The foreign tax credit might be large enough to zero out your tax liability in the "non-primary" country.)

_Generally_ if this is a sole proprietorship (or equivalent) then what you described is probably correct, that Australia would ignore it (since you're physically working in the U.S.) and, of course, the U.S. would tax that income as part of your worldwide personal income. The business is inseparable from you, in other words. If you can keep it that simple, that sounds good to me! (Having a substantial ownership interest in a foreign _domiciled_ company can be rather complicated from a U.S. tax and reporting point of view.)



> Somewhat related: can a spouse on an E3D continue to operate their own Australian business, prior to an approved EAD?


When physically present in the United States, no, not "operate" (as in work). Until the EAD is received that person does not have permission to work in the United States, and work is where you physically perform it no matter how long the wired or wireless connection is to your clients and business interests.

Occasional, incidental _monitoring_ of overseas business affairs is probably OK. But your spouse should treat the pre-EAD period spent physically in the U.S. as an extended, actual vacation.


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## Bellthorpe (Jun 23, 2013)

I agree with you regarding the spouse. Once in possession of an EAD, the spouse can work at anything, including a business back home. However, before getting the EAD, the status is 'cannot work'. The reality is that most people in such a situation would continue to operate the business, but it would be prudent not to draw any wages during the hiatus waiting for the EAD.

I disagree regarding the E-3 holder. This person does not get an EAD, which would allow them to work at anything. Their work is entirely dependant on what their visa says (the employer/s is/are actually written on the visa) and the visa will reflect one or more LCAs. You can only work for an employer who has an approved LCA, even if that employer is yourself.

However, if the Australian entity is incorporated, it must have at least one Australian director. If it's oneself with an ABN, just declare yourself non-resident for the period, and keep running the business.

Personally, I'm closing some of my Australian businesses and re-incorporating them in the US. Just as I did when I left Singapore.


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## elrodur (Dec 7, 2015)

BBCWatcher said:


> Assuming the Australian government doesn't have a problem with that, sure. Assuming you have permission to work in the U.S., the U.S. government has no problem with that to my knowledge.





> _Generally_ if this is a sole proprietorship (or equivalent) then what you described is probably correct, that Australia would ignore it (since you're physically working in the U.S.) and, of course, the U.S. would tax that income as part of your worldwide personal income. The business is inseparable from you, in other words. If you can keep it that simple, that sounds good to me!


It's a sole proprietorship, correct. All income is via Stripe directly into my AU account, which makes the accounting side easier as well.



> But your spouse should treat the pre-EAD period spent physically in the U.S. as an extended, actual vacation.


Thanks for clarifying this part. Her business doesn't run "passively", so there's no point risking it. 3 months off it is!



> I disagree regarding the E-3 holder. This person does not get an EAD, which would allow them to work at anything. Their work is entirely dependant on what their visa says (the employer/s is/are actually written on the visa) and the visa will reflect one or more LCAs. You can only work for an employer who has an approved LCA, even if that employer is yourself.
> 
> However, if the Australian entity is incorporated, it must have at least one Australian director. If it's oneself with an ABN, just declare yourself non-resident for the period, and keep running the business.


This is certainly where it seems to get into a 'grey' area (RE: the E3 + LCA being tied to an employer). As above, it's a sole proprietorship with an ABN—a very passive side project—so ideally I can keep it ticking along in Australia and report the income to the IRS/ATO as applicable.

(and thanks to the both of you for the replies)


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## Bellthorpe (Jun 23, 2013)

I'm not sure that I agree with your conclusion. For a start, there's no such thing as 'passive' or 'side project' in tax law. If it earns income, it's a business. I don't know if immigration and IRS speak to each other, but it seems to me (BBCWatcher would probably know better) that they might, when you file income from two sources, conceivably ensure that your immigration status is good for two jobs.

We have an E-3 and an E-3D. All Australian income (except interest) is taken by the E-3D holder, whose EAD allows for work of any kind, with no restriction.

This is conjecture on my part, but I do know that you can't have *US* work from an employer who is not named on your visa.


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## BBCWatcher (Dec 28, 2012)

Bellthorpe said:


> I'm not sure that I agree with your conclusion.


Upon reconsideration, Bellthorpe, I'm leaning in your direction. But before I do that....



> For a start, there's no such thing as 'passive' or 'side project' in tax law. If it earns income, it's a business.


Well, no. Royalties, for example, are income but both the payor and payee can be non-businesses (individuals). There is "passive income" in tax law, lots of it.

I think it's best to keep the tax issues separate, except to summarize them by saying that, _regardless of whether or not you have work permission_, you still have tax and financial reporting legal obligations. Even if you entered the United States illegally, have no work permission, and operate as a sex worker you are still required to report your income and pay tax on it. Violation of one or more sets of laws (immigration, prostitution) does not mean you're then allowed to violate the other set (taxes).



> I don't know if immigration and IRS speak to each other, but it seems to me (BBCWatcher would probably know better) that they might, when you file income from two sources, conceivably ensure that your immigration status is good for two jobs.


So let's assume the IRS and USCIS share information. The mere presence of income derived from sources other than the U.S. employer is not a problem. That's perfectly OK. It's probably a safe assumption that the vast majority of E-3 visa holders have at least some income they receive from sources other than their single authorized U.S. employer.

OK, now here's where I start to agree with you.

I didn't realize until you pointed it out that the E-3 requires a Labor Condition Application (LCA), just like the H-1B and H-1B1. And I agree with you, Bellthorpe, that is an immigration limitation. The LCA means you've got one named employer in the U.S., period. Unfortunately you can't "freelance."

So, how do you solve that problem? The most common way is you let somebody else back in Australia _or your E-3D+EAD holding spouse_ take over the business, and you transition to a purely passive, income receiving role while you are in the United States assuming the business is still willing to pay you something (dividends, royalties, installment sale proceeds, pension, whatever). You _can_ receive passive income from the business -- that's OK. (Has to be properly reported and taxed, of course.) And you can work for/with that business when you're not inside the United States -- on your two week Christmas vacation in Darwin, or whatever -- so even some degree of work-derived income is still OK. But within the U.S. your E-3 and LCA govern, and you cannot work for another master (or for yourself) while inside the United States. You have to be serially monogamous in your work patterns. 

As it happens Singapore has very similar rules. So I really have no excuse for not double checking that. Thanks for the correction, Bellthorpe.


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## BBCWatcher (Dec 28, 2012)

OK, let me follow up a bit here to raise a couple more points:

1. If you're a Web developer, spend 8 days in Darwin per year, and those 8 days generate 58 times as much income as your Web development work for your U.S. employer (the other 357 days), and if USCIS has reason to consider these facts, USCIS is probably not going to believe that you're exclusively devoting all your working hours to your U.S. employer while in the U.S. So if you do lead a "double life," or if your E-3D+EAD spouse is taking over the business while you're in the United States, I'd be very careful to clock off from that business fully while in the U.S.

2. If you were to acquire another type of immigration status that doesn't come with this LCA restriction, that's fine. I'm just commenting here on the LCA restriction.

3. You are still allowed to volunteer for your local religious group, the community blood drive, helping the homeless, etc. (And I hope you do.) But stick to charitable organizations of your own free choosing. You cannot volunteer (or "volunteer") for your business, or even to serve coffee at Starbucks -- that's dodgy at best. This is partly to protect you. Otherwise an evil employer could dispatch his/her E-3/H-1B/H-1B1 to go clean somebody else's yacht on the weekends, off the employer's books, "as a favor." Such abuses have been known to happen in Singapore, and the government is not pleased.


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## elrodur (Dec 7, 2015)

Thanks again to both of you. The business would still require a few hours a month from me (support; ongoing development) so it's unlikely that even transferring it to my E3D/EAD spouse would be sufficient to avoid issues.

My understanding is thus: working a few hours a month on my AU-based sole proprietorship whilst under an E3 visa (and therefore an LCA) is unwise at the very least.


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## Bellthorpe (Jun 23, 2013)

I think you might have missed the {wink, wink, nudge nudge} point here.

I'm sure that your spouse, *under your expert tutelage*, could do all the tasks required of the business. And draw a commensurate salary.


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## elrodur (Dec 7, 2015)

Bellthorpe said:


> I think you might have missed the {wink, wink, nudge nudge} point here.
> 
> I'm sure that your spouse, under your expert tutelage, could do all the tasks required of the business. And draw a commensurate salary.


I did get that part  However, due to the nature of the business it'd probably be a bad idea. I'd be publicly attached to the business (in a niche community) so saying otherwise wouldn't be too believable.

For others, that approach may not be a problem!


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## twostep (Apr 3, 2008)

Bellthorpe said:


> I think you might have missed the {wink, wink, nudge nudge} point here.
> 
> I'm sure that your spouse, *under your expert tutelage*, could do all the tasks required of the business. And draw a commensurate salary.


Please refrain from crossing the line. Thank you.


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## Bellthorpe (Jun 23, 2013)

BBCWatcher said:


> As it happens Singapore has very similar rules. So I really have no excuse for not double checking that. Thanks for the correction, Bellthorpe.


I didn't know that. For most of my time in Singapore (more than half of my working life) I've been 'self-employed' in that my wife and I were employed, on an employment pass, by a company that my wife and I incorporated.

Setting that up led to a catch-22 situation. You could not get the EP until you had a job offer from a company. The company could only be formed by residents or employment pass-holders. But I've always found the Singapore Government to be very pragmatic about these things. Just fill out the paperwork, answer the 'religion' question the right way, and it comes to pass. 

But to my point - we paid ourselves partly in Singapore and partly in Hong Kong. We paid no Singapore tax on the latter because the money was not repatriated to Singapore. We paid no Hong Kong tax on the former for a different reason. The Singapore tax department had no problem with that. I was not aware of any barrier to earning other income - has that changed, or is it true for different working visa status?


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## BBCWatcher (Dec 28, 2012)

We've veering off topic here, but in brief the government here would now probably be more skeptical about that arrangement than it was in the past.


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## xabiaxica (Jun 23, 2009)

BBCWatcher said:


> *We've veering off topic here*, but in brief the government here would now probably be more skeptical about that arrangement than it was in the past.


It's called thread drift... it happens on discussion forums

It seems that the OP has had as much info as he is likely to get from a discussion forum, so no harm done

The moderators will decide if any thread drift is a problem, so don't let it concern you


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