For The Bean Counters !

[satanic]

Mmm OK then... good luck with it

[Duncan]

it doesn't say that a contractor cannot work for one company indefinately, he is still free to work for anyone else, but he doesn't have to accept other jobs if he doesn't want to.....

not true, in fact one of the tests is that the "contractor" must have worked at least 20% of the time away from the primary job....the 80/20 rule.

You actually can pay people cash in hand legally, any form of payment is legal if it's recorded.

absolutely agreed....its just that when people say "cash in hand" they normally mean not recorded or declared

All in all for every dollar you're paid on the books it costs an employer 50 cents to a dollar on top of what you earnt. Plus it then saves them in regards to bas etc.

That figure for on-costs is way too high...

Oncosts: for a perm worker. Casual remove 1 and 3 and maybe 5

1. 4 weeks annual leave per year = 8c

2. 8 days sick leave per year = 3c

3. 1.3 weeks LSL per year = 2c

4. 2-6% worker's comp = 2-6c

5. 9% super= 9c

6. Payroll tax = 6c

oncosts 30% minimum.

Take it or leave it, if you don't think I am right by basically saying thAere are legal ways around these so called "concrete laws" then good for you and good luck to you.

Tom, everyone in the world gets to make their own decisions on right and wrong. The line is in a very different place for you than me. In particular if someone is working for me they get a fair share of what they earn for the business, underpinned by fair interpretation of law and the applicable awards. I might keep less short term, but I will still be around in 15 years doing the same thing as I have been for the last 15 years

[Kujotk]

not true, in fact one of the tests is that the "contractor" must have worked at least 20% of the time away from the primary job....the 80/20 rule.

Tom, everyone in the world gets to make their own decisions on right and wrong. The line is in a very different place for you than me. In particular if someone is working for me they get a fair share of what they earn for the business, underpinned by fair interpretation of law and the applicable awards. I might keep less short term, but I will still be around in 15 years doing the same thing as I have been for the last 15 years

The test is 80/20, but it is up to the subby to work that out, it has nothing to do with the person who is employing to get a job done. Do you make sure your local plummer has done other jobs before you that financial year so your not accused of being the employer of that plumber?

No it isnt, there is one line, the only thing is allot of people think that having a pretend line further away from the border is better when really its because they don't know any better. A business is purely in the market to make profit, nothing else, you can say what you like and act high and mighty, but at the end of the day a business has one purpose and thats to make a profit and to survive. That is the definition of a business. If a business is sitting there spending money where it legally doesn't have to then there would be no business left, how would the economy go with businesses being shut down because they were too busy paying the gov or employees overinflated prices in tax and other benefits? The stats of a business surviving the first 5 years of operations is 1/3, the biggest expenditure to a company is wages and other benefits, then its high tax. If small businesses did everything by doing everything 100% by the book i can assure you the stats of businesses surviving 5 years would probably look more like 1/6 surviving. Just because its not 100% by the book doesn't mean its illegal or wrong.

On another note who is to say you garantee you will be doing the same thing for another 15 years because you keep less short term, that doesn't make sense, that is such a simplified version of business that it doesn't hold any truth behind it. Anything can happen tomorrow, what if your employees all strike for a few months? Without the cash reserves your fixed expenses will finish off the business eventually.

Ive sent you a PM about the rest of what i was going to say because I get the vibe you are implying I screw over workers or i'm a scammer or something like that who is in it for the quick $.

Just because I said different ways of not ahving to do things by the book doesn't mean thats what I do, somethings you have to do to survive, anything more than that is greed. I am far from a greedy person.

Either way this is the last post on this topic by me because I highly doubt allot of people here understand what I am saying.

[SECURITY]

my view is to give the govt what it is owed. how you produce your product or service is up to the director's ethics and view on legislation. going back and forth about each others' ethics is silly as some people do it by the book and some people create their own. in my opinion there is nothing wrong with either as long as you are within the law although making your own book always seems to produce more cash flow.

for eg. i am in property development. labour is paid in a 100% cash in hand basis and 70% of sub contractors are paid via a line of credit. avg turnover is around 4-5mil per year, actual profit is usually around 15-20%. on properties we sell we always pay tax and our returns are always claimed on minimals. the 2nd financial year of the company's operation (8yrs ago) we got audited and it was found that we were owed $14,000 from unclaimed items on our return. we have never been audited since and we still claim items back on minimals.

this is how we are comfortable in doing it and it works for us as a small business.

p.s. a good accountant is worth the money you pay.

[saliya]

read into it more carefully with the definitions of what a contractor is.

I'm not giving away all of my secrets because I have worked hard to do what I do and not have any legal repercussions, you guys can figure it out yourselves if you think it can benefit you.

But I do agree this scenario will be extremely dificult if the industry in question is a factory worker. But there are allot more jobs than just a factory worker in our society.

It also says a contractor is free to work for anyone and the general public ect.... it doesn't say that a contractor cannot work for one company indefinately, he is still free to work for anyone else, but he doesn't have to accept other jobs if he doesn't want to.

If you don't want to pass on the knowledge because it cost you a large amount of effort to gain it, congratulations, you (well, more correctly, other people just like you) are the reason that you had to put in the large amount of effort in the first place. If you don't want to pass it on because others using this knowledge could negatively affect you (e.g. everyone starts doing 'it' and the ATO shuts it down) - that's a different story.

Contractors don't have to work for more than one company; but the 80/20 (Personal Services) rule is liable to be thrown at a contractor that derives more than 80% of their income from one place.

It's not up to the payer to determine this; it's up to the contractor. The purpose is basically to avoid a contractor splitting income with someone else (e.g. you work, your wife stays home, but instead of earning $200k both of you earn $100k); all the other rules (e.g. valid deductions) still apply no matter whether it's PSI or not.

http://www.ato.gov.au/businesses/content.a...ntent/13043.htm

http://contractortaxation.com/?q=australia/taxation/80-20 or

http://www.brainbox.com.au/brainbox/Forum....F3?opendocument

http://www.smartcompany.com.au/legal/20100...k-accounts.html

may all be of some interest.

To the OP: 'cash in hand' typically means 'without PAYG tax being deducted' - if we accept this definition, then it's illegal for a normal employee according to the ATO (it would be, wouldn't it )

For a contractor using a vehicle (like their own company) you don't need to pay the tax every week; but it's still due at the end of the year after all valid deductions applied.

PAYG is a way of the ATO avoiding the "sorry, I can't pay that" situation. Remember, what they eventually got Capone for was tax evasion.

http://www.smartcompany.com.au/finance/tax...-operators.html

http://www.fairwork.gov.au/Things-everyone...be-wary-of.aspx

Cheers,

SW

Edited April 25, 2010 by saliya