Scott,
Just to throw something else into the mix.
If a you are working for a contracting company and they are paying your
company then often they assume that you have your own public liability and
professional indemnity insurance. If they pay you as an employee then they
cover the insurance. Here at Suncorp we require any company we work with to
have $1,000,000 public liability and $3,000,000 professional indemnity
insurance (may be the reverse). This amounts to about $2500 a year in
insurance.
Bottom line is check who is required to have the insurance.
Brian
> -----Original Message-----
> From: Angus Johnson [SMTP:[EMAIL PROTECTED]
> Sent: Tuesday, 24 August 2004 11:30
> To: CFAussie Mailing List
> Subject: [cfaussie] RE: OT: Contractor firms.
>
> Scott,
>
> I dealt with a few similar contract companies in the UK. The tax system
> over there is somewhat laxer than OZ though and I know the ATO don't
> like these contractor companies. (For obvious reasons).
>
> It's always a blurry line between "employment" and "contracting". Make
> sure you ask them how they avoid the ATO assessing you as an ordinary
> employee. In the UK for instance you write several clauses into your
> contracts such as your right to provide a substitute in your absence and
> the right to work for other companies (not just one). Everyone knows
> it's setup up this way to avoid employee relationships and not enforced.
>
>
> Or the other thing they like to do is incorporate you, become directors
> of your company and employ you. That way they avoid personal services
> implications ie., you providing direct labour to a client and
> withholding tax. They then pay you dividends and salary which although
> you still pay tax on can reduce your bill significantly.
>
> Down side. Commission or corporate fees can add up (maybe as a high as
> 5% of your earning). As usual they will disclaim all liability in the
> event of ATO challenging your setup. I know in the UK the government
> they had been threatening to hit contractors for these arrangements but
> I think the resulting exodus of talent overseas puts them off.
>
> Boils down to how much tax they are going to save you versus their costs
> versus risk of tax audit.
>
> (I was an accountant in another life but don't tell anyone)
>
> Cheers
> Angus
>
> PS Brett's comment about locking you in is very valid. Particularly if
> they get you to incorporate.
>
>
>
>
>
> -----Original Message-----
> From: [EMAIL PROTECTED]
> [mailto:[EMAIL PROTECTED] On Behalf Of Scott
> Barnes
> Sent: Tuesday, 24 August 2004 10:33 AM
> To: CFAussie Mailing List
> Subject: [cfaussie] OT: Contractor firms.
>
> Hi All,
>
> I'm toying with the idea of handing off my financials to a contractor
> agency
> (ie www.myitg.com). Has anyone here had experiences with such companies
> and
> can give me some advice on pros/cons of using such agencies.
>
> Regards
> Scott Barnes
> CodeMonkey For Hire.
>
>
>
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