Helping Candidates Find Temporary and Contract Job Solutions
Working as a contractor
Contracting refers to an arrangement under which you render services to a company or organisation without becoming an employee.
Contracts will always be for a fixed period, usually weeks or months, although it is not uncommon for “back to back” contracts to be offered.
Why take a contracting role instead of becoming an employee?
Flexibility. Ability to set your own working hours to fit in around your life. Financial. Rates of pay are up to 30% higher compared to similar permanent positions, primarily due to the contractor rate factoring the offset of the company not providing:
- Annual leave;
- Sick leave;
- Accumulation of long service leave; and
- Associated benefits.
How to manage a temporary or contractor role through an agency as an individual?
The advantage of this arrangement is that the agency can play an active role is seeking work for you and in negotiating your hourly rate. As well as managing tax, insurance and OH&S requirements through an agency as an entity such as an ABN Company or Trust.
Although involving initial cost the advantages in using an ABN Company or Trust which offsets this additional cost include:
- The ability to take advantage of salary packaging options such as fringe benefits and salary sacrifice superannuation.
- Income splitting opportunities, although these may be limited by the Personal Services Income(PSI) rules; and
- Asset protection
PAYG Taxation (PAYG)
If you contract directly with the company or organisation or contract through an agency and the contract is primarily for your labour, the company, organisation or agency will deduct PAYG tax from payments in the same way as would happen with salary and wage income.
Goods and Services Tax (GST)
If you choose to work under an ABN Company or Trust, you will be required to register for and charge GST where you offer your services through this ABN Company or Trust. In this situation, you are required to register for GST if annual turnover exceeds $50,000. You are required to charge GST on your invoices, accordingly, you need to take this into account when negotiating contracts. You are also able to claim an input tax credit for GST on items purchased for use in your contracting business.