piers_morgan

Any IT contractors out there???

Got my first interview coming up on Monday and just wonedering how to go about the contracting route here in Oz. Back in the UK I worked under an 'umbrella' company which was pretty easy.

But here, to minimise taxation etc is it best to set myself up as a company? sole trader? or are there umbrella companies here to that will sort out my tax? Legal ways only please

Any relevany links would be appreciated. And if anyone can reccommned any umbrella/accountancy companies that I would be abel to use that would be great!

But I guess I'll be shafted here by agencies etc like in the UK!

Back to my revision then


Piers

owieb

I went the Pty route and setup my own company, mainly because I had to be running my own business as a requirement of my visa. This setup has worked fine, no real problems running it, I can be a director and company secretary which is much more practical than a limited company in the UK. All you really need is a good accountant to ensure that you are making the most of your money and tax breaks etc. The monthly returns that need doing to the ATO are simple and they can be done electronically on-line. I just pay myself a set wage and take the rest out in dividends.

I'm currently employing a guy and he goes through an umbrella company www.cxc.com He is happy with them and they handle all his accounts and invoicing etc, supposedly giving him tax benefits at the end of the day.

Obviously having your own company does incur start-up costs and end-of-year accounts so it really depends what is going to be best for you. Might be worth speaking to an accountant and get their views.

Personally I like to be in-charge of my money and business affairs rather than put it all in the hands of one company.

jat

hi

contact a company called Lesters - 02 9956 8228 - thats the sydney office...

they act as an umberalla company and if you can work direct for a client - ie not going through agency you can go through them.. they specialise in IT people...

they will organise your tax and living away from home allowance etc etc....

i would call them up and find more details as i know the rules have changed recently.. but effectively they are you sponsors and you invoice your end user at your rate.....

but like i say call them for details...

brisnick

i went through umbrella companies because to be honest i'm too damn lazy to be bothered with the hassle of running my own pty co. never had an issue, and my umbrella company also worked out all tax, etc and seemed to maximise my earnings.

got too lazy altogether tho and took a permanent job for a while, since i was offered roughly the same as i was contracting. that's the brisbane market for you though!

WheelsOfSteel

IMO the best way to do it if you are planning to spend time away from your palce of residance is the nominee director route.

Have a company set up a company in a tax efficient jurisdiction like Nevis, etc and also set up an LLC in say Delaware, USA to act as a paythrough. You will have appointed directors who will 'manage' the company but the company account will only have you as the signatory. This account will be offshore in say Isle of Man.

You work for the LLC who pay you a % of the rate billed to the client, the rest accumulates of shore away from prying eyes.

To operate legally you will off course have to pay income tax on all money you bring in above the % you have agreed with the LLC and which you are declaring through say your umbrella company.

Works well if you are planning on going somewhere else for a while as you can then bring the money on-shore more easily.

Search for Delaware LLC on the net if you want more info...

Alan Collett

That might work if you are not resident in Australia, but if you are in Australia on a long term temporary visa or a permanent residency visa I'd be very careful ... recognise that if you are in Australia on such a visa the onus is likely to be on you to disprove the ATO's assertion that you are tax resident in Australia.

Best regards.

Alan Collett

I'd have a chat with my Australian CA partner John Griffiths on 07 3833 3999, or john - at - gmga - dot - com - dot - au.

Best regards.

EssexNobby

Hi there Piers - I've also been thinking about contracting once I get to Brisbane. I did this for 5 years in the UK and found it quite rewarding (workwise as well as financially - £££ !). It's interesting to see that the options exist for either setting up a LLC or going via the Umbrella route. I also would like to go with Umbrella, having remembered what a pain it was to do monthly accounts, etc. as a LLC.

Juts now hope that's there's jobs for a VB/SQL Server developer in Brissy !

jah4reds

Hi,

I'm an IT contractor running my own company & contracting direct to one client. I also did this in the UK.

I prefer to run my own company because I prefer to manage my own financial affairs and try to stay away from agencies at all costs!

Basically, unless you can diversify your income stream away from just one client the benefits of running your own company seem to be less rewarding that in the UK. You'll probably be caught by the 80/20 rule - ie more than 80% of your income comes from one source. This means the ATO will want you to pay yourself a wage using most of the company income - so they can tax you at the highest rate possible rate. If you intend to work for more than client, or employ others your options are much more open - you must get good advice from an accountant.

The startup and close down costs of running a company are relatively higher than in the UK (relative to the income you'll earn here).

Setting up a company bank account is very quick, but be warned that most commercial contracts (and probably all government contracts) will require you to get professional indemnity and public liability insurance. Here in QLD all government contracts require GITC clearance (which doesn't cost anything but takes time to set-up). If you are the sole director/employee you may need director's insurance - if you intend to employ others you'll probably need Workers Compensation too. And don't forget GST registration.

Have I put you off yet?:scared:

I'm not sure that if you intend to arrange contracts through agencies it's worth setting up a company - I felt it wasn't worth the hassle and closed my first company down (regretted it later though when I needed to set another one up for my current contract).

New regulations mean that below a certain income level you will be allowed to choose a 3 month tax reporting period. Much, much easier

Don't know of umbrella companies - besides it hardly rains here in Brisbane <groan>


The accountant I use is based in Brisbane - so probably not much use for Sydney.

Good luck,
AndyH

datamile

If you known of the PCG in the UK, this is the Aussie eqiv.

http://www.contractworld.com.au/reloaded/ica-news.php

Amazulu

Thanks for the link, very interesting, looks like they are having the same problems over there.