worzel

If I get a job contracting rather than permanent (white collar) what are the implications? In the UK you have no job security, pension, life insurance but can (sometimes) charge more and can claim travelling to work / lunches as tax-deductible. Is it similar over here?

ljj

Hubbie Contracted when he first got here in the IT industry. He had a couple of options. The first place he registered as a business (that way you are your business and as such you pay Workers Insurance etc) He had to faff around doing business returns, had an accountant (pretty dodgy one we reckon) make sure Super was paid etc from his wage. He also had to take his own tax out of the wage.
The second place was so much better as he went under a "umbrella scheme" of the recruitment agency who for a small charge a month worked it all out for him so he just concentrated on work. It meant he didn't have to run around in his free time doing business stuff. He subsequently went Perm at the company after working there for 18 months as they didn't want to loose him but he could have carried on Contracting (6 months Contracts). We preferred a bit more security of being an Employee (hopefully) even though the wage wasn't as good but the company is global and are very good to their staff.

Have I confused you more now?

Louise

worzel

Thank you! That is just the sort of thing I was after. It sounds very similar to the options I had in the UK (I also went for the umbrella option).

Do you know if there are similar tax benefits to the UK. ie being able to claim some expenses as business-related (like commuting costs, meals etc) to reduce tax bills.

Presumably, because the company wasn't having to pay certain costs when he was not an employee he was able to earn more as a contractor?

JaneandJim

There are very few things you can claim as expenses, insurance, accountancy fees & any purchases made for running your business etc. They have an equivalent to IR35 here but its much tighter and pretty much impossible to get round for a normal IT contractor unlike the UK.

I do all of Jims accounts and handle tax etc. I only have to see our accountant once a year so he can do the company tax return which I'd have to do anyways for our personal returns. Its really no hassle.

One big benefit is that you can choose to pay tax by attributable income. This means that you pay your PAYG once a year when you file your personal tax return. So you pay yourself a gross salary, stick the tax portion of it in a high interest account and earn yourself some interest and then pay it to the ATO in one hit.

Hope this helps.

Jane

ljj

Yes, he did earn more as a contractor (in Annual Salary) but they wanted him to stay with them so much (he was offered Perm job with another company and told them he wanted a perm position and wasn't going to renew his contract with them) they made it worth his while and after all, he didn't really loose out as a perm when you take into account Holidays, Sick Days and being paid Public holidays.
Xmas as a Contractor Stinks as there are already 3 days loss of wages before you start thinking of having a couple of other days off work.
Looking forward to him having the week between xmas and new year off and still getting a normal wage.

It depends how good you are at being disciplined with money. If you can do that with the Tax that is good but we are crap! We always find some excuse of "needing" the money put away.

It's personal choice I think, but we certainly found it was harder to get Perm jobs than contract.

Louise

worzel

I should be good with money as I am an accountant

I just got back from talking to an agency in the city and we agreed that as I do systems work, which by its nature has an end point, contracting is the likely option. I know it doesn't give me a contract of employment to wave in front of credit applications but it sounds like I can get better money this way.

It should also be easier for me to get 12 months or so of Aussie experience on my cv so that I can get something permanent in the future more easily and maybe I can impress enough that I get offered a permanent job - it has happened before.

Thanks for your responses.