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  • #1177228
    Jason@Plumsale
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    Hi,

    In QLD you don’t need work cover for directors, only staff. Not sure on VIC.

    Because of Personal Service legislation you will have to pay yourself PAYG on all money that comes into the company, so in essence the company should not make much of a profit/loss at the end of the year.. Depending on how much you are earning the ATO will decide how often you will have to report your payg.

    BAS and IAS reporting is very simple and you should be able to do yourself. I’d definitely get an accountant to do your end of year reporting though.

    #1177229
    TehCamel
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    Blknite, post: 206574 wrote:
    Thanks , I will try to contact him.
    Btw whats ur structure , do u pay urself from ur company accounts ??

    I have a trading trust, at the moment I don’t pay myself a salary.

    #1177230
    Blknite
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    • Total posts: 43
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    Thanks all for your help.
    I met a local accountant yesterday and he advised pretty much same what you guys have mentioned – Register for PAYG and pay yourself a salary + super.

    He also suggested as mentioned in one of the posts above to include my spouse as my employee and pay her minimum wages insuring she remains below tax threshold.

    #1177231
    Jason@Plumsale
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    If all of your income is from personal services then you will not be able to employ your spouse.

    If your company has another income source that is not provided by your own personal service then they can be paid from that income only.

    You can read more at https://www.ato.gov.au/Business/Personal-services-income/In-detail/Companies,-partnerships-and-trusts/Personal-services-income—companies,-partnerships-and-trusts/?page=15

    #1177232
    Blknite
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    Jason@Plumsale, post: 206860 wrote:
    If all of your income is from personal services then you will not be able to employ your spouse.

    If your company has another income source that is not provided by your own personal service then they can be paid from that income only.

    You can read more at https://www.ato.gov.au/Business/Personal-services-income/In-detail/Companies,-partnerships-and-trusts/Personal-services-income—companies,-partnerships-and-trusts/?page=15

    If I go by following (Result Test) , PSI rules shall not apply for me as I am working on a telstra project , paid a daily rate and have not been told t deliver something by the time I end my contract .

    https://www.ato.gov.au/Business/Personal-services-income/In-detail/Companies,-partnerships-and-trusts/Personal-services-income—avoiding-common-mistakes/?anchor=Working_out_if_the_PSI_rules_apply#Working_out_if_the_PSI_rules_apply

    I might be wrong though , not sure.

    #1177233
    Jason@Plumsale
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    You need to pass the PSI tests before the ATO will treat you as a normal business. If you fail the tests then you have extra rules applied to you..

    Here is an example https://www.ato.gov.au/Business/Personal-services-income/In-detail/Companies,-partnerships-and-trusts/Personal-services-income—avoiding-common-mistakes/?anchor=Retaining_profits#Retaining_profits

    #1177234
    Blknite
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    Jason@Plumsale, post: 206863 wrote:
    You need to pass the PSI tests before the ATO will treat you as a normal business. If you fail the tests then you have extra rules applied to you..

    Here is an example https://www.ato.gov.au/Business/Personal-services-income/In-detail/Companies,-partnerships-and-trusts/Personal-services-income—avoiding-common-mistakes/?anchor=Retaining_profits#Retaining_profits

    Ah.. 1 more headache.. I will ask my accountant . I’ll kill him if he e says I can not employee her.

    #1177235
    TehCamel
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    • Total posts: 873
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    Blknite, post: 206862 wrote:
    If I go by following (Result Test) , PSI rules shall not apply for me as I am working on a telstra project , paid a daily rate and have not been told t deliver something by the time I end my contract .

    https://www.ato.gov.au/Business/Personal-services-income/In-detail/Companies,-partnerships-and-trusts/Personal-services-income—avoiding-common-mistakes/?anchor=Working_out_if_the_PSI_rules_apply#Working_out_if_the_PSI_rules_apply

    I might be wrong though , not sure.
    I think you could be wrong (IANAA)

    – you haven’t been told to deliver something specific by the end of the project.

    Q1 wrote:
    For you to answer ‘yes’ to this question, the contract needs to say that your business must produce an outcome before being paid. This may include progressive payments paid on achieving specified outcomes.
    You don’t answer yes to that, because you said yourself, there’s not a specific outcome.

    q2 wrote:
    80% rule – does more than80% of your income come from one client
    sounds like it does from what you initially described. If you were able to pick up some more freelance work from an unlreated entity though, you might get around this a bit.
    #1177236
    Blknite
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    TehCamel, post: 206868 wrote:
    I think you could be wrong (IANAA)

    – you haven’t been told to deliver something specific by the end of the project.

    You don’t answer yes to that, because you said yourself, there’s not a specific outcome.

    sounds like it does from what you initially described. If you were able to pick up some more freelance work from an unlreated entity though, you might get around this a bit.

    Agree , I think I am wrong.
    Had a word with my accountant he also thinks my income would be PSI. And if its PSI than I can not employee anyone & pay himher from income my income receives.

    Isn’t there any workaround for this . There must be a way to save tax if you form a company..:(

    #1177237
    James Millar
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    • Total posts: 1,739
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    1. Having seen many Telstra engagements of this type, it sounds like you may struggle to pass the results tests (which means PSI regs will apply unless otherwise exempt). Hourly, daily based pay with non-specific outcomes are a problem.

    2. Unless you have significant other income (20%) from these activities from other clients then the PSI regs will probably apply (you could apply for an ATO determination / review)

    3. The general anti avoidance requirements for alienation of personal exertion income will apply as well.

    4. WorkCover (Vic) and super guarantee contributions are not specifically levied on attributed PSI so I would avoid paying everything out as salaries. You can use the attributed PSI mechanism instead. Your accountant will need to be familiar with the attributed PSI reporting process and educate you about the BAS PAYG requirements for this.

    5. Anyone that advised that a company can be used tax effectively for income splitting etc. for individual consulting income has probably misadvised.

    6. My recommendation – as always – never start or do anything without speaking with an accountant first.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1177238
    Blknite
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    Thanks all for your replies and suggestions I appreciate all them.

    On a slightly diff note , is there a free or low fee software like MYOB Essentials that can manage your invoices , money coming in , expenses etc etc

    #1177239
    Jason@Plumsale
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    • Total posts: 155
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    Blknite, post: 207203 wrote:
    On a slightly diff note , is there a free or low fee software like MYOB Essentials that can manage your invoices , money coming in , expenses etc etc

    There are a few on the market and it depends on your requirements, if you need payroll and more accounting features, they are a little more expensive. But if you only want to manage money in and out, then we offer a low cost solution. Link in the footer.

    #1177240
    Blknite
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    • Total posts: 43
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    Jason@Plumsale, post: 207205 wrote:
    There are a few on the market and it depends on your requirements, if you need payroll and more accounting features, they are a little more expensive. But if you only want to manage money in and out, then we offer a low cost solution. Link in the footer.

    Thanks Jason , I will have a look now

    #1177241
    Blknite
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    • Total posts: 43
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    I am after from where I can lodge my BAS statements as well.

    #1177242
    TehCamel
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    • Total posts: 873
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    Blknite, post: 207216 wrote:
    I am after from where I can lodge my BAS statements as well.

    i’m not sure of any you can lodge bas from. I know with Saasu, I have to run the report then go to thebusiness portal to lodge it..

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