Contracting v. Salaried Employment

[Pushka]

If you're a contractor with only one contract, the employer has to pay super. So in JohnK's workplace, any contractors working along side him would have employer-funded super.

Not if the contractor passes the PI test.

 

[serfty]

If you're a contractor with only one contract, the employer has to pay super.

True that ... Contractors

However many such work environments enforce structures such that the contractor effectively has to pay any Superannuation themselves.

 

[RooFlyer]

And if you are a contractor, or at least a self-employed one, Xero is your friend, as is the ATO simplified BAS and IAS lodgement.

And my accountant lets me sub-use their licence for no charge (well, not direct, anyway)

 

[Pushka]

And if you are a contractor, or at least a self-employed one, Xero is your friend, as is the ATO simplified BAS and IAS lodgement.

And my accountant lets me sub-use their licence for no charge (well, not direct, anyway)

I see the ATO is introducing an auto system for business to report PAYE from July 1 2020 for small businesses. I really hope I’m out of it all by then. They have just changed super clearing house this month. Hate the ATO.

 

[I love to travel]

Interesting thread for those that suspect we will become contractors by force rather than choice

 

[Hvr]

Hate the ATO.

Hate your federal politician. The ATO is merely doing their bidding.

Of course if people didn't lie, cheat and steal then there wouldn't be a need to introduce more and more rules and regulations.

 

[Pushka]

Hate your federal politician. The ATO is merely doing their bidding.

Of course if people didn't lie, cheat and steal then there wouldn't be a need to introduce more and more rules and regulations.

I don’t think the Feds are all that worried about processes just the rules. If someone at ATO actually answered the phone that might help too.

 

[JohnK]

Where you live is purely your choice so why should the tax office supplement your choice?

The tax department already supplements lots of people.

Your company sends you to Brisbane for 10 years and they are able to claim all expenses including travel, accommodation and meals. You are a salaried worker getting annual leave, sick leave and superannuation. Nice little perk right?

I'm sorry I see that as inconsistent.

 

[Pushka]

The tax department already supplements lots of people.

Your company sends you to Brisbane for 10 years and they are able to claim all expenses including travel, accommodation and meals. You are a salaried worker getting annual leave, sick leave and superannuation. Nice little perk right?

I'm sorry I see that as inconsistent.

Who is paying for the expenses though?

 

[oz_mark]

Interesting thread for those that suspect we will become contractors by force rather than choice

Fixed term employment contracts seem to be a growing thing these days....

 

[lovetravellingoz]

I'm sorry I see that as inconsistent.

Can you imagine the huge number of people that would be rorting this is if was allowable.

The ATO quite rightly does not use money from taxpayers to subsidise such lifestyle choices.

 

[JohnK]

Who is paying for the expenses though?

The company pays all costs and claims all costs.

Employee A earns $80,000/year and has no expenses.

Employee B earns $80,000/year and pays airfares, accommodation, train fares, food etc. Not much left.

Employee A is being rewarded because they landed the right job. I don't quite understand why we congratulate this person but put down person B who is disadvantaged by travelling a long way for work. It is not an easy choice. That person should have stayed put and sponged off the government.

 

[Flying mermaid]

If you're a contractor with only one contract, the employer has to pay super. So in JohnK's workplace, any contractors working along side him would have employer-funded super.

Yeah not so much. Certainly in IT the contractors will generally come in through a recruitment company. The IT contractor will either have their own company, or be in with another couple of contractors. The end company pays the recruitment company the hourly/daily rate. The recruitment company pays the payroll tax. The contractors company handles insurances, super and payg and generally there are things that are allowable such as car leases, Lafha (in some cases) and computers. Often the payroll is handled by a payroll company, which puts another step in. So the recruitment company pays the payroll company who then handles leases etc and pays the contractors.

Many contractors I knew did income splitting to some degree even though they werent supposed to but without an extensive auditing program who knows or cares. There was a huge amount of auditing in the 90s, it was all cleaned up and then the psi legislation came in, but the dodgy practices came back with a new generation. Many IT contractors are squeaky clean but definitely not all!

 

[dajop]

Employee A earns $80,000/year and has no expenses.

Employee B earns $80,000/year and pays airfares, accommodation, train fares, food etc. Not much left.

Employee A is being rewarded because they landed the right job. I don't quite understand why we congratulate this person but put down person B who is disadvantaged by travelling a long way for work. It is not an easy choice. That person should have stayed put and sponged off the government.

What about Employee C, earns $80,000/year and pays $700 /week in rent, but lives <10 min walk from the office, so incurs no commuting fees.

Then Employee D, earns $80,000/year and pays $400/week in rent and $300/week in parking, petrol and car wear and tear etc. So if Employee B gets a tax deduction for costs of getting to work (airfares, etc) ... why shouldn't Employee D as well? Yet Employee D has the same living expenses as Employee C, choosing to spend $300 on extra rent instead of transport.

There may be a case to be made for government assistance (in form of tax deduction or other assistance, such as stamp duty concessions) for the cost of relocating from a location to the where the work is located, with all sorts of adjustments in the economy, where work is does move around. However I can't see the case for providing tax deductions for those who choose to commute long distance (i.e. by air) compared to those who face a long daily commute, in turn to those who choose higher rent to avoid a long, costly daily commute.

 

[Deleted member]

I solved this problem 35 years ago, I formed my own company and ran my own business.
Being self employed is empowering, while sometimes being pretty difficult as well. A lot (the majority I’m told) of small businesses don’t survive beyond 7 years. Everything I do (within reason ) as some degree of tax deductibility to it.

 

[Deleted member]

What about Employee C, earns $80,000/year and pays $700 /week in rent, but lives <10 min walk from the office, so incurs no commuting fees.

Then Employee D, earns $80,000/year and pays $400/week in rent and $300/week in parking, petrol and car wear and tear etc. So if Employee B gets a tax deduction for costs of getting to work (airfares, etc) ... why shouldn't Employee D as well? Yet Employee D has the same living expenses as Employee C, choosing to spend $300 on extra rent instead of transport.

There may be a case to be made for government assistance (in form of tax deduction or other assistance, such as stamp duty concessions) for the cost of relocating from a location to the where the work is located, with all sorts of adjustments in the economy, where work is does move around. However I can't see the case for providing tax deductions for those who choose to commute long distance (i.e. by air) compared to those who face a long daily commute, in turn to those who choose higher rent to avoid a long, costly daily commute.

Another reason why I situate my office seven minutes commute from my home.

 

[RooFlyer]

Employee A earns $80,000/year and has no expenses.

Employee B earns $80,000/year and pays airfares, accommodation, train fares, food etc. Not much left.

Sounds like Employee B is pretty dull and lacking initiative if they didn't do anything about their situation. An employer may also look at the situation and conclude the same thing, and treat B accordingly.

 

[burmans]

Your company sends you to Brisbane for 10 years and they are able to claim all expenses including travel, accommodation and meals. You are a salaried worker getting annual leave, sick leave and superannuation. Nice little perk right?

The difference is in the word, "Your company sends you to Brisbane for 10 years". Actually the ATO looks very dimly at this, if you are there for 10 years they don't regard you as working away from home, you have moved and can no longer legitimately claim all these as business expenses.

 

[BAM1748]

I haven't been able to for 10 years. Government wants everything their way.

You have been able to until 1 July 2017.

 

[JohnK]

You have been able to until 1 July 2017.

Not according to my accountant.