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  • #983848
    jeffreyj90
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    hi,
    I currently working as a carpenter as a sole trader, working predominantly for one builder. as i am aware, the builder is to be paying me superannuation on top of my weekly wage which goes by how many hours i work each week. Coming into tax time he has been told by his accountant to get all of his workers working under a company (basically to avoid paying super). Unfortunately this is just how the building industry works in australia and i am left with two options. 1 – to considerably drop my hourly rate to make up for the super cost which he would then pay me, or 2 – become a company and pay my own super and continue on the same hourly rate.

    my question is, i am currently trying to come up with a deposit for a house and if i was paying super or i dropped my hourly rate, this would not be possible. i understand that superannuation is for my future but is there a way i can get around this?
    any advice is greatly appreciated!

    #1144580
    EmbalmSkincare
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    Hi Jeff,

    Sorry to hear that your employer is causing you problems like this.
    My husband works in a similar arrangement, he’s a sub-contractor, submits his weekly invoices and the company pays that minus tax, which they withold for him but they also pay his super.

    I suggest you speak to a very good accountant and I can highly recommend Xavier from Axle Edge Accounting [email protected] or phone (03) 8340 0405.
    Tell him I send you, please. Mel from Embalm Skincare.

    Good luck!

    Regards,
    Mel

    #1144581
    al.giffard
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    Hi Jeffrey,

    You’re right in saying that this is fairly common in the building industry.

    If you go with the option of setting up a company (or a trust, which is another option), the builder you’re working for will pay the company the same amount you’re currently getting paid. If the company then pays you a wage, you will still have to pay yourself super, and PAYG. However, you can instead have the company pay you dividends – the end result is that no super is paid for you and you get paid the full amount, which seems to be what you’re after.

    There are a few obligations and ‘traps’ with this option, like Workcover, managing your own income tax, ASIC fees for a company, and accounting fees. But there can also be a few perks, depending on your situation.

    Either way, it is advisable to have a chat to an accountant about setting this up and maintaining it, to make sure you don’t miss anything (which is both common and costly). Many accountants don’t charge for the initial discussions about what’s involved – and what perks there might be for your situation – and you should be able to get a fixed quote for any fees involved going forward. That way, you can decide if this is the best option before you have to pay anything.

    Cheers,

    Alan.

    #1144582
    Anonymous
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    jeffreyj90, post: 165587 wrote:
    hi,
    I currently working as a carpenter as a sole trader, working predominantly for one builder. as i am aware, the builder is to be paying me superannuation on top of my weekly wage which goes by how many hours i work each week. Coming into tax time he has been told by his accountant to get all of his workers working under a company (basically to avoid paying super). Unfortunately this is just how the building industry works in australia and i am left with two options. 1 – to considerably drop my hourly rate to make up for the super cost which he would then pay me, or 2 – become a company and pay my own super and continue on the same hourly rate.

    my question is, i am currently trying to come up with a deposit for a house and if i was paying super or i dropped my hourly rate, this would not be possible. i understand that superannuation is for my future but is there a way i can get around this?
    any advice is greatly appreciated!

    I am not sure if this will impact on you but someone working in the building and construction industry probably should be aware that if they are the director of a registered company then this will affect their eligibility for various Centrelink payments if there is a quiet time between projects and no income is being received.

    Also, Alan has provided some very good advice about how working under a company structure will enable you to avoid paying superannuation while you have a need for that income in the present, and you can then switch to taking advantage of superannuation as a tax minimisation tool when it suits you. However I am not sure what the cost/benefit analysis would be of this approach.

    Ruby

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