Contracting with RISE
Working for Candidates to find rewarding Temporary and Contract Job Solutions
Working as a contractor
The advantage of this arrangement is that RISE can play an active role in seeking work for you and in negotiating your hourly rate.
Contracting is defined as an arrangement through which you render your professional services to a company or organisation without becoming a permanent staff employee.
Contracts will always be for a fixed period, often months and years, renewable “back to back” contracts are common with long term arrangements offered.
Considerations for a contracting role instead of becoming an employee?
Many professionals are career long contractors due to the nature of the projects they are engaged on or through choice preferring to deliver an assignment and move to a new challenge. Many people like the freedom this offers. The ability to set your own working hours to fit in and around your own commitment and interests is something modern professionals appreciate and value. Rates of pay for contractors are up to and in excess of 30% higher compared to similar permanent positions in the same labour market. The higher rate of pay is ostensibly due to the contractor rate factoring the offset of the company not providing:
- Annual leave
- Public Holiday Entitlements
- Sick leave
- Accumulation of long service leave
- Associated company benefits
The question of engaging in a contractor role through an agency as an Individual or an Entity?
Individual PAYG Taxation (PAYG)
If you contract directly with the company or organisation or contract through an agency and the contract is primarily for your labour, the company, organisation or agency will deduct PAYG tax from payments in the same way as would happen with salary and wage income.
Entity ABN (Pty Ltd or family trust)
As well as managing tax, insurance and OH&S requirements through an agency as an entity such as an ABN Company or Trust.
Although involving initial cost the advantages in using an ABN Company or Trust which offsets this additional cost include:
The ability to take advantage of salary packaging options such as fringe benefits and salary sacrifice superannuation.
Income splitting opportunities, although these may be limited by the Personal Services Income(PSI) rules; and
Goods and Services Tax (GST)
If you organise to engage in a contract under an ABN Company or Trust, for complaince you will be required to register for and charge GST where you offer your services through this ABN Company or Trust. In this situation, you are required to register for GST if annual turnover exceeds $50,000. You are required to submit and invoice with your timesheets calculating your rate of pay with the hours worked and charge GST on your invoices. It is strongly advised that this is taken into consideration when negotiating contracts. You are also able to claim an input tax credit for GST on items purchased for use in your contracting business. Often certain Insurances are also required to be held prior to becoming engaged by certain client organisations through an agency.