Home – New Forums Money matters PAYG Contractor or Incorporated Contractor? Reply To: PAYG Contractor or Incorporated Contractor?

  • Total posts: 60

Hi Daniel

To answer the question if you are disadvantaged by becoming an payg employee, if you don’t pass the personal services income tests the accountant you spoke to mentioned, you would gain no real advantage in having a company. You essentially have to pay all of the earnings of the company out as salary and superannuation to yourself each year, and are unable to distribute income to other family members ie your spouse. If you run it through a company you also have to register for workcover.

If the pay rates are the same, or very similar, then go with payg.

On the flip side, if you feel that you may be working for more than one organisation, owning your own company will give you the flexibility of streaming dividends in future.

The ’employer’ is at an advantage with you setting up your own company because they are not responsible for your superannuation if paid to a corporate.

All the best

Travis Allen CPA