cczmark

Hi all,

Sorry if this has been asked/answered before. I work at a senior level in IT and can expect to earn a reasonable A$ six figure salary. Am arriving in Melbourne in Feb on a permanent spouse visa.

Back here in Blighty a contractor will generally earn more and pay less tax.
- Is there the same rates differential in Oz?
- Do contractors in Oz pay less tax (by offsetting expenses etc)?
- Any benefit to setting up a Pty Ltd company when contracting?
- Does Oz have the equivalent of National Insurance which is added to your tax bill? (I know there is Medicare at 1.5% and also looked at the Yahoo personal finance site which just shows tax rates)

Thanks for any help!
Mark.

DMH

I suppose a good question to add to that is also is there a IR35 type thing in Oz too where if you have a private Ltd company, there is a way to pay even less tax?

I am going to be looking for IT Mgmt work too in Perth in Jan.

NickyC

Most lucrative contractor lurks were closed around 2000. Check out 'personal services income' on the ATO site.

You can set up a company but can only claim the same expenses that the average taxpayer can claim. Any 'profit' that your company makes is deemed to be your own personal income and tax is charged on it at your marginal rate (not the much lower company tax rate).

hoofie2002

The 80/20 rule holds here - if > 80% of work comes from < 20% of clients [and clients would be an agency normally] you can't go under the personal services rules.

Most people I know here who contract let the agency handle the payroll tax/super contrib's and thats it. There is a company called CXC who can act as a financial intermediary and offer a degree of salary packaging [additional super contribs, laptop, car etc out of pre-tax income]. I've found the office in Sydney to be a bit slack, but the chap who represents them in Perth, Jeff Malin, is a top bloke who has never let me down.

All in all - don't bother with the private company, it will just cost you too much to run unless you can guarantee differing income streams etc.

One additional point - if you do contract, make sure their are not too many agencies in the way. I've heard numerous stories of two agencies/manpower companies between you and the client which ultimately reduces your fee per hour. If that's the case, screw them down on their rake-off.

Geelong Gent

This would depend on an individuals circumstances - dont be too general with your claims. Not all contractors sit on 12 month rolling contracts. Cost of travel, meetings, flights, office related are all deductible. The rules are too prevent (employees turned external to keep the headcount off the books) abuse for non commercial orientated contractors.

If you are a contractor for commercial reasons you can still claim - just need to adhere to employee/contractor tests.

steve99

I can vouch for Jeff at CxC too, I've had numerous dealings with him over the past few years and would recommend anyone new to the Perth market thinking of contract to have a chat to him.

The Volume of contract jobs has defnitely reduced in Perth over the past 12-18mths, employers are getting wise to the tight candidate market and ever increasing rates and are chosing to lock people into permanent roles whereever possible.
As a rough guide a contract role would pay about a 30% premium over the equivilent perm role, work on a 1800hr year and its pretty easy math.

Amazulu

math?
When did you become a yank?

steve99

Sorry!
Im blaming Krudd for that one....