Australia's 2013/2014 budget could mean extra work for IT contractors. Such workers are often considered “sole traders” or “independent contractors” for tax purposes and are currently required to submit quarterly payments for the goods and services tax (GST) and personal income tax. Australia has around 750,000 independent …
Are you sure???
Simon, not sure if you have spotted something that I haven't, but BP2 (http://www.budget.gov.au/2013-14/content/bp2/html/bp2_revenue-10.htm) indicates that the monthly PAYG arrangements will apply to large entities (with a turnover >$20m) from 2017. This may not affect too many individual IT contractors.
Possibly more significant for contractors is the introduction of a cap on tax deductions for work-related self-education expenses (further down on the same page) - a $2,000 cap would limit the ability of many IT contractors to claim deductions for IT related training.
(Beer, because reading budget papers always induces thirst).
Re: Are you sure???
Companies with yearly tax over about $30,000 already have to pay monthly, so not sure what you're on about.
Gray Ham, I'm sure. Follow the link in the story and search on "sole trader". You'll find the bit we've referred to there.
That's only if you are a sole trader surely
And most contractors will have set up some form of Pty Ltd company surely. Sole Trader is too dangerous (you're directly liable in case of legal and financial issues) to operate under and has fewer tax and legal protections.
Most independent contractors I know work under some form of Pty Ltd structure for exactly these reasons. The only thing worse than Sole Trader is to be a part of a partnership.
I'm still lost
I'm a sole trader from years back... But I work full time now, only retaining the business name and ABN for the odd job I might do outside work. I happily go and do my BAS every quarter, and I'm fine with that.... But I gather I will now need to sit down and do pointless paperwork 12 times a year instead of just 4.
If this is confirmed by the ATO, I will not be happy. It will close my business. So that won't make much difference to the bottom line at Wayne Swan's House Of Madness on it's own... But think about how many thousand small businesses that will be killed by this, and how much GST and income tax will be wiped off combined. Cash under the table will be the way I do any odd jobs once again (haven't done that since I was in high school).
So, an extension of current system then
Sure, I hate doing my BAS even once a quarter, and will hate the way this will mess up the cashflow situation. The biggest hassle is that the amount I "earn" for PAYG differs every month, so in some ways you just make up a number that is kinda close, and then balane it all at the end of the year. I can't see how this would make people go out of business or be more inclined to "take cash" though.
When I recently restarted contracting, the ATO had me doing a monthly PAYG-Installment, so I'm guessing any new changes would just be an extension of something like that. If so, then this might be focused more on Taxi-Drivers and people doing piece work.
For my part, I'll just put "72 hours" on the bottom of the form where it asks how long it took to fill in.
Re: So, an extension of current system then
Don't forget about the other 83 minutes... make it 72 hours and 83 minutes.
Entering a big fat zero month after month isn't much effort to be honest. Doesn't look like changing any time soon either..
RE: illegal to descriminate against small business in a capitalist society
This is typical kind of anti-competitive law which undermines the small or mainly sole traders.
What about multi-nationals who filter billions in unpaid tax away!
Anything that hampers with paperwork and bureacracy or stops small business growing, eventually into large corporations, is seriously damaging to the Capitalist system.
Large companies tend to fade and fold eventually as part of the business cycle to be replaced by new companies grown from small traders.
If your large businesses keep "hanging around" year after year you know you have a monopolistic system where competion is cleverly and subtley crushed (often with colusion of The State). For example banking.
Conditions for all business, great or small should be the same, and this incudes tax and tax evasion regulation.
Government borrowing from taxpayers.
There are some (too many) months, when my company's income is zero. There are a few months when the income is nearly a third of annual income. You get that with long-term contracts. So in those "fat months"; I'd be paying tax that the tax office will have to pay back later. With interest. At least a quarterly reporting and payment scheme (via BAS) provides some smoothing.
I note the government's bad credit history. They keep borrowing when they have a debt which they cannot pay off.
Why should I lend them the money that I need to keep operating?
It'd be really, really stupid of the government to expect me to take out loans to maintain operating capital; because the costs of those loans will be offset against income, reducing the total tax revenue due.
Re: Government borrowing from taxpayers.
You also have to consider that when somebody says something like this (from the article)
"government gains improved cashflow it says will boost its coffers by $1.4bn over the forward estimates"
What that really means is that the leeches in Big Goverment have extracted an extra $1.4bn out of the productive side of the economy and put it into the unproductive side.
That's 1.4 billion dollars coming out of earners pockets that goes straight the pockets of the various groups suckling on the teats of big goverment, as hilariously symbolised by "Hindenboob", the hideous multi-titted whale balloon that was ironically intended to celebrate the centenary of Canberra. Apparently.
Can we have an election please?
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