Paul2412

In the UK, I have a private limited company which I use when I'm contracting for up to 6 months for an employer. The employer pays an agency and then the agency pays me. I then pay 20% corporation tax on my profits.

Would anyone know how this would work in Australia? I've looked into setting a company up, however I'm just wondering whether it is as common to have an umbrella company as it is in the UK.

datamile

Rules are stricter here, really do need multiple clients, office etc.

lots just end up as employees of the agencies. Lots of jobs start out as contracts so that they can see what you are like as well.

itigo

http://www.entitysolutions.com.au/Home.aspx

This is the company my husband uses. They take care of payroll, everything. Is this the kind of thing you mean? He doesn't have a company though......just self employed.

hoofie2002

Here your normally paid by the agency. Or you can elect to go with an umbrella company like CXC for example. They can offer salary sacrificing for vehicles, laptops etc but thats about it [and they charge a fee for all this].

The private limited company is NOT a good idea here unless you are very sure you will have multiple clients in a year - the rules are even stricter than the UK. [Although I met a couple once who were both contractors and because of that could make it work].

seanpears99

I agree with hoofie, I was with Cxc but they charge 4% but are good for guaranteed lafha (for now anyway), I also leased a car through them, but as soon as my lafha finished (pr) and I didn't need my car, the 4% wasn't worth it. I now have an abn as a sole trader, paid 700 bucks for my insurances and getting my account to sort it out. Have to pay about 45k tax between now and june 30 and I couldn't set up a trust as the ir35 stuff over here (psi) is too tough to get around even though I am currently running two contracts ( as one finishes in August). Got to take it on the chin I'm afraid.

Paul2412

Thanks, so basically it looks like contracting would work out more expensive in Oz if I can't put it through a company and only be liable for corporation tax. Coupled with the increase in permanent work wages, is contracting even really worth it?

In the UK, I've contracted for 3 companies last year and had the money paid into my company account. I then paid myself dividends on the money earned after the 21% corporation tax. Is this something you can't do in Oz?

seanpears99

We have all done that over in the UK, but u have to weigh in everything else. Increased wage, lifestyle etc. I am doing what you did in the uk over here, my one contract pays me PAYG and the other into my account and I pay my GST - Cash Based (VAT) and Tax. You just cant save as much (or con as much).

Whats more important, being here or being there?

NickyC

Lots of contractors used to do it - but few do now.

If you fail the "personal services' rules, the ATO will deem your company's profits to be your own personal income and tax you accordingly.

And the company tax rate here is 30%.

Paul2412

Being there, and earning enough for the uncertainty of contracting to outweigh the safety of a permanent job as it does here.

If it doesn't, then permanent would be the way forward.

itxrd

You can still contract - tons of people do. You'll earn about a third more. You just have to do it differently to the UK. It is a different country you know

I used CXC - they took 4%. There are loads of companies and am sure you can haggle. Either way its not megabucks and takes away all the hassle which as people have said is more than the UK.