ABN number

[Pencil]

Ok I just got offered job if I want it, but it using an ABN number. I don't have one yet, but how do they work. I assume they mean I pay the tax. But how much % wise and how often.

[markTHEblake]

It means you dont have a job.

[rubin]

It means you dont have a job.

This.

It means that it's a contract role, not a job as such.

[Yossarian]

Way to answer the question accountant rubes.

[Pencil]

Yeah I know that, but its better than nothing.

[rubin]

Way to answer the question accountant rubes.

I can offer further detail if u like, however best suggestion, see an accountant to have it set up properly. With the recent changes, get it done properly once and ur set. Secondly, you will also need to ensure u have all the right insurances in place, and this will vary, dependent on what the role is for.

In a nutshell, yes you will need to pay your own tax, but it won't be the same as payg tax, it will work on a different scale.

[dave1]

Apply online

Go onto the ATO website. Abn info on there

I have one for a small coaching role that I do (not golf)

I only earn $140 per week. I dont take any tax out.

My normal income tax covers it.

[rubin]

Apply online

Go onto the ATO website. Abn info on there

I have one for a small coaching role that I do (not golf)

I only earn $140 per week. I dont take any tax out.

My normal income tax covers it.

Different situation Dave. And I'm sure that if an audit were to occur, you would indeed need to be paying tax. $140 a week is not a significant amount, however there are different tax scales when PAYG tax (general income tax) is not in the equation. I.e, depending on how u set it up, you could be required to pay a flat 30% of any income earns under that abn, whether it's $10, $10,000, or $10 million.

If u require an abn to earn an income and this will be your main source of income, DO NOT TAKE SHORTCUTS! You might get lucky and it works out ok, but it is honestly worth the slight inconvenience to pay someone who knows all the ins and outs to do it for you properly.

Additionally, if u have an abn and are earning money with that abn, and employ someone (I.e pAy them a sum of money, again it could be as little as $10) you are required by law in w.a to get and maintain workers compensation insurance to cover them. Fwiw, this person could also be a contractor themselves (I,e you pay their abn etc, etc). You may also find that the position you are looking at requires you to have indemnity to the principal (the person whom has contracted you), may require you to have public liability insurance, may require that you maintain insurance to cover business or property related incidences, machinery etc.....

People (like dave1 it seems) discount the importance of doing this properly. Do it right the first time, and you won't have to worry again. Take shortcuts, and u could be in for a world of hurt down the line.

Again, I repeat my post from earlier, it is worth the relatively insignificant financial cost to employ a professional to do this for you. Especially as this sounds like it will be your main source of income (perhaps not just for you, but your family as well).

[dave1]

I didnt know that. Cheers....Thought under 10,000 that I didnt have to pau any.....Will look into it...Yes I have insurance however.

[idgolfguy]

Use a contracting company and get them to pay you via your abn. Insurances could be very expensive.

[rubin]

I didnt know that. Cheers.

Thought under 10,000 that I didnt have to pau any.

Will look into it.

There are heaps of different ways to set it up, and it will come down to fine print. There are some that do have a minimum earnings level of 10k, there are some that are higher, there are some with no minimum earning level.

This is not income tax, or similar. If u earn 50k as a normal employee of xyz company, and then you also earn under contract an additional 50k I.e through an abn, your combined income is not 100k and thats what u pay tax on. It is significantly more difficult, convoluted and complex than that. You need to understand how the business (yes business - ABN does stand for Australian Business Number) is set up.

An example - we were recently party to an investigation into one of our small business clients who had done this very thing - tried to take a shortcut in setting up his business and stuffed up. In addition to a 60k tax bill for only 2.5 years of work, he was also looking at the better part of 50k in compulsory insurance premiums due to his mistake, plus a significant amount of lost income (I don't have a figure on that one). 110k that the guy didn't have because he made some little mistakes....

[Cosmopolite]

its an Australian Business Number (ABN) not an ABN number

[Leon Phelps]

its an Australian Business Number (ABN) not an ABN number Just like an ATM machine.....

[Grunt]

Just got one for my wifes photo Business, was easy to apply and came back in around 5 days with a number. Like what was said before just have a look at the ATO website.

[Yossarian]

Rubes,

Say you are contracted by Leighton or Brookfield. You still have to insure yourself? But if you contract someone in you have to insure them? Why?

[simmsy]

Are u actually being contracted? Or just on a contract term.

Are they paying your super?

[simmsy]

As a small business u need to have PL & PI Insurance. Sole operators can't take out workers comp for themselves. More and more places are asking for personal accident ins. before they allow sole traders on site. Companies like Brookfield and the like still have to have all their ins. though. It's a dbl up to cover ass and make more money for the ins. companies.

[mike]

Rubes,

Say you are contracted by Leighton or Brookfield. You still have to insure yourself? But if you contract someone in you have to insure them? Why?I worked as a contractor 6 years ago and I had to provide insurance for anybody I employed, it did not come under the umbrella of the organisation that was contracting me.

[mike]

Are u actually being contracted? Or just on a contract term.

Are they paying your super?I had to pay my own super.

[rubin]

Rubes,

Say you are contracted by Leighton or Brookfield. You still have to insure yourself? But if you contract someone in you have to insure them? Why?

The specifics will vary from state to state, but it comes back to the workers comp act.

What simmsy said is spot on. If u are a sole trader or partnership (as in u do not own/run a pty. ltd. company) u cannot cover urself for workers comp. however if u employ or contract someone yourself, u will need it to cover them.

The actual reasoning behind it comes down to a definition of a worker as defined by the act (sect. 175 from memory), along with limits of liability.

The big companies (leighton, monadelphous, rio tinto, bhp etc) are requiring now that their contractors maintain their own insurances and request a waiver of subrogation (a hold harmless agreement). It stems from arrangements in America that over the years Australia has adopted.

Thats the short answer - the whole/detailed answer is significantly longer and takes about a half hour to explain just talking about it, let alone typing it.

FWIW pencil - the arrangement your looking at may be as simple as what simmsy has suggested. Without more specifics though, its difficult to answer.

[Yossarian]

Why can't you require your subcontractors to maintain their own insurance like the big companies do?

[Dotty]

I thought it was a NZ law that you had to work 'cash in hand' when you come over here. :)

[rubin]

Some do, 90% of people however don't know They can do it or simply can't be bothered wit the hassle and additional costs. The big guys do it because in the long run for them it's cheaper, for the smaller guy - the costs would out way the benefit IMO. Having said that, more and more business' are taking this option out for contractors.

There are instance and circumstances where they cannot enforce this, but that comes back to how ur business is setup.

[Pencil]

I turned it down, he wasn't offering enough $$ to justify it anyway. Doesn't matter many articles I read in the paper about tradies walking into jobs, I can't do it. Luckily for me the wife picked up a job a couple of days after we got off the plane.

[backintheswing]

Where are you pencil and what trade? My company is always looking for trades people.

[Pencil]

Perth, Chippie