Hey all
A little bit off property here but just after advice on the following.
Im a carpenter full time on wages and my boss has being asking if I wanted to change to subcontract or set up a company and subcontract to him. My morgage broker told me to stay on wages as it will be easier to get finance for future investments so just after any thoughts?I no if I subcontract he will pay super and ill have to take my tax out and holidays and sick and so on but the difference in rate 38hr to 47hr allows for that I think?
Just because you ‘subcontract’ doesn’t necessarily meaan you are a conntractor. There are various tests to pass from a superannuation POV and a tax point of view. There are also the legal side of things — you will need your own insurance for starters.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If you are going to be subcontracting back to the builder and Doing the majority of your work for him. Could be seen as sham contracting.
You also have to look at things like job security. As a subby, if things cool down and there is no work you have no income, a full-time job means you do have a level of stability.
Also getting 37 as full time and then 47 as a subcontractor you’ll still be behind. On average the required amount over salary to ensure you pay for licences, insurance, super, annual leave and sick leave that you lose from your job equals 1.75 higher then your pay. You need to be contracting at 1.75 higher then your base rate per hour to be at the same level as your pay. Ie 37 x 1.75 = 65 a hour.
Pluses for going subcontractor.
You can start off as yourself and then perhaps you yourself might chose to hire people labourers and apprentices underneath yourself. Build up a gang of carpenters so you can tender for bigger roles and projects whilst slowly getting off the tools yourself.
so there is a advantage to expand your business.
Generally speaking, if you’re contracting and paying your own tax you’ll be considered self employed and will need to show a couple of years financials to qualify for a loan. You may be able to find a lender that will consider your previous history in the industry in your PAYG role and provide an exception to the two years financials.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
hello sam
there will be a lot of things you will need to consider befoure making the move from wages to subby and making sure you put your tax money aside and be prepared to wait for money for longer periods of time aswell. and if your boss is deducting the super from your wage so there there you are earing $47 – 9.75% = $45.80hr so there for the $7.80 a hour more does that cover all your rdo’s, sick leave , annual leave you get the point ..
iam also a subcontractor I have found it relative easy to get finiance but like Jamie mentioned you have to provide more then you would if on wages
these are just my thoughts on the situation , best of luck sam
Hi Sam
As a contractor working for the same person for two years or more under work cover laws your deemed to be an employee and they require your personal tax return if you have a work cover issue. I was on $55per hr then had a claim where I tore my Knee and under work cover I was paid $12 per because I took a small wage from my company, I was screwed because my knee would not heal and I could not get off the work cover merry go round it sent me broke. As a contractor you have to work 20 % or some one else or other jobs to not be deemed as an employee.
If your builder has you on 30 day and goes broke you can get caught in the domino effect.
If your good and can get your own work and keep up with the paperwork then there’s big money to be made but all work and no play makes Sam controlled by his business, it can be a trap it all about the ability to say NO sometimes.
Go for it
TobyThanks for your knowledge guys. I think ill just stay on wages for the time being until I get my builders licence and then revisit my options then as I will be wanting to fase away from my boss into doing my own jobs. Thanks
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