May not bother going at all - quoted 60% tax

[Guest]

I had plans on contracting within Oil & Gas and setting up a company to work through.

In the UK doing this there are good tax advantages depending on how much to draw out of your company.

 

I enquired to an accountant on how much to set up & run a company or trust and was told $1900 set up and depends on how much to run. That is extorsion!!!!

I also asked (based on a day rate and normal weeks worked a year) and the figure came back that I would be paying about 61% in tax which seems way too high, how do others work there or make any money?

 

Anyone else in a simular situation?

 

If I have to pay 60% tax then I dont think I will bother. Fourty something then fine (even though not good) but at 60 surely theres something wrong, especially as its so expensive - how do people survive?

[Guest The Ropey HOFF]

I don't want to sound crass or flippant, but your post made me laugh, someone earning so much money that they are in the 60% tax bracket asks ...... How do people survive, the simple answer is ...... On a lot less than what you will be earning. Don't want to offend, but I did find it funny. Hopefully someone will tell you it's wrong, best of luck mate.

[Perthbum]

I had plans on contracting within Oil & Gas and setting up a company to work through.

In the UK doing this there are good tax advantages depending on how much to draw out of your company.

 

I enquired to an accountant on how much to set up & run a company or trust and was told $1900 set up and depends on how much to run. That is extorsion!!!!

I also asked (based on a day rate and normal weeks worked a year) and the figure came back that I would be paying about 61% in tax which seems way too high, how do others work there or make any money?

 

Anyone else in a simular situation?

 

If I have to pay 60% tax then I dont think I will bother. Fourty something then fine (even though not good) but at 60 surely theres something wrong, especially as its so expensive - how do people survive?

60% are you sure....if its correct that is insane, what s the se of working your butt off if they are taking that much.

[MrTux]

I find it hard to believe you would be taxed 60%, starting up your own company is the most tax efficient way of contracting in the UK. It would be interesting if someone knows how it is done in aus?

[Zman]

A number of things to think about.

 

Firstly, the ATO brought in a ruling a few years ago that's termed Personal Services Income (or something similar). Essentially it aimed to close a loophole whereby (mainly IT) contractors set up companies to avoid paying the higher rates of income tax. You would be best off consulting a tax accountant but my understanding is that if 80% or more of your income comes from one company then you will be taxed as if you were an employee rather than benefiting from the lower company tax rate.

 

Secondly, as with any service, whether it's in the UK or Aus, you should shop around. You may find someone who will do all the paperwork for you for less than the $1900 you've been quoted.

 

Thirdly, the company tax rate here is 30%. Also, there is no income tax rate that get's anywhere near 60%. The rates for this financial year are as follows (note that the Medicare Levy (sort of equivalent to NI) is 1.5% of your income - higher if you have no private health insurance).

 

 

[TABLE]

[TR]

[TD]Taxable income[/TD]

[TD]Tax on this income[/TD]

[/TR]

[TR]

[TD=width: 160]0 - $18,200[/TD]

[TD=width: 340]Nil[/TD]

[/TR]

[TR]

[TD=width: 160]$18,201 - $37,000[/TD]

[TD=width: 340]19c for each $1 over $18,200[/TD]

[/TR]

[TR]

[TD=width: 160]$37,001 - $80,000[/TD]

[TD=width: 340]$3,572 plus 32.5c for each $1 over $37,000[/TD]

[/TR]

[TR]

[TD=width: 160]$80,001 - $180,000[/TD]

[TD=width: 340]$17,547 plus 37c for each $1 over $80,000[/TD]

[/TR]

[TR]

[TD=width: 160]$180,001 and over[/TD]

[TD=width: 340]$54,547 plus 45c for each $1 over $180,000

 

[/TD]

[/TR]

[/TABLE]

 

So if your income means your marginal rate is the highest you'll be getting about 68% of your income after tax - that's before you make any claims for tax refunds, something which a good (but honest) tax accountant will help you maximise.

 

Hope this helps.

[Freckleface]

I think you have either been given poor advice or you have misunderstood.

[Rupert]

 

 

[TABLE]

[TR]

[TD]Taxable income

[/TD]

[TD]Tax on this income

[/TD]

[/TR]

[TR]

[TD]0 - $18,200

[/TD]

[TD=width: 340]Nil

[/TD]

[/TR]

[TR]

[TD=width: 160]$18,201 - $37,000

[/TD]

[TD=width: 340]19c for each $1 over $18,200

[/TD]

[/TR]

[TR]

[TD=width: 160]$37,001 - $80,000

[/TD]

[TD=width: 340]$3,572 plus 32.5c for each $1 over $37,000

[/TD]

[/TR]

[TR]

[TD=width: 160]$80,001 - $180,000

[/TD]

[TD=width: 340]$17,547 plus 37c for each $1 over $80,000

[/TD]

[/TR]

[TR]

[TD=width: 160]$180,001 and over

[/TD]

[TD=width: 340]$54,547 plus 45c for each $1 over $180,000

 

[/TD]

[/TR]

[/TABLE]

 

So if your income means your marginal rate is the highest you'll be getting about 68% of your income after tax - that's before you make any claims for tax refunds, something which a good (but honest) tax accountant will help you maximise.

 

 

 

I agree with most of your post, but wondering where you get 68% from just because someone's marginal tax rate is in top band? Surely it depends upon precise income.

 

And OP yes, as others have said, you will not be paying 60% tax!

[Guest]

The ropey hoff - I am merely stating from an email I was sent and looked at the figures which had nothing to do with any amount I may or may not make so please dont be in a ropey huff as you may not make as much as you like, I was just amazed at that figure quoted. I'm sure what ever you make you would be put off if you were suddenly going to get 30% less so please dont be so rightous.

 

Tax is supposed to be fair and i think everyone should pay the same % - they all have the same needs from the state and it goes accordingly with amounts earned.

 

The figures quoted above - even the last bracket looks to be about 45% which is not good, but not too much to put you off moving! cheers Zman!

 

Guess i will look into it more but any more info would help a few of us. All this talk on her about working in the mines and FIFO - most of you will need to look into the best way of getting paid.

[doing a geographical]

There are ways to offset tax and legally avoid tax, just like there is back home. A lot of it involves real estate over here, I don't really know much more than that.

[fish.01]

The ropey hoff - I am merely stating from an email I was sent and looked at the figures which had nothing to do with any amount I may or may not make so please dont be in a ropey huff as you may not make as much as you like, I was just amazed at that figure quoted. I'm sure what ever you make you would be put off if you were suddenly going to get 30% less so please dont be so rightous.

 

Tax is supposed to be fair and i think everyone should pay the same % - they all have the same needs from the state and it goes accordingly with amounts earned.

 

The figures quoted above - even the last bracket looks to be about 45% which is not good, but not too much to put you off moving! cheers Zman!

 

Guess i will look into it more but any more info would help a few of us. All this talk on her about working in the mines and FIFO - most of you will need to look into the best way of getting paid.

 

Just to make sure you understand, it is not 45% of your total income just 45% of each dollar you earn over $180,000. The actual percentage of tax taken from your total income will be lower. For example if you earn around $180,000 they will only take roughly 32% tax from your income. Apologies if you realise this already.

[Zman]

Rupert, you're correct that the amount you get after tax is dependent on how much you actually earn, i.e. the higher it goes over $180K, the lower the percentage becomes. I meant to say that if your income just gets you into the highest rate (i.e. you earn $180K and no more) then you will end up with about 68%. BTW that 68% also includes the Medicare Levy having been deducted too.

[Zman]

One more thing I should add (although this is a much more subjective thing), if you base your decision solely on the relative tax rates, you may not end up making the right decision (whether it's to move here or not). There are good things and bad things about Oz as is the case for the UK. Given some of the disappointments that some posters have written of in these forums, I strongly urge anyone to research everything thoroughly. Moving away from family and friends (even if you know someone here) is hard and shocks (cultural, financial, environmental or others) to the system don't help. Personally, I like it here and the benefits far outweigh the disadvantages. As I've said before, with modern technology you can live a hybrid life: enjoying the benefits of the environment here whilst "consuming" those bits of the UK that are better (newspapers, TV, chocolate etc.)!

[Guest]

Zman - many thanks for the info. i wasnt basing a decision on purely just that but if i were going to be skint then there's not much point as your quality of life wont improve and thats what I'm going for. I have asked about working hours etc too as if your on 10 hours a day your life will be like groundhog day anywhere you are.

 

Thats good if the percentage is all in so to speak and the quote I got wasnt any good.

 

ps how do you consume chocolate via the internet? do you have a taste machine on USB or if importing wont it melt?

I have see its better to keep your UK accounts and buy stuff in the UK - a good example are kindle books on UK amazon and posting magazines out as there $10 plus in Perth for classic bike !!

[Guest Consulaire]

10 hours a day would be a lovely change, not worked less than 12 hour days (in the UK) for some time. Looking to retain all my UK accounts for purchases then get good ol'mom to ship them over too to keep the best of both worlds. Now all I need is that offer..

[northshorepom]

I think you will find the take home amount in Australia compared to that in the UK to be very favourable at high income levels (and you must be talking about good money if 60% has even entered the equation, even though I agree with other posters that there's something wrong there)

 

The thresholds are so much higher for a start, there's no NI to stealthily add a big chunk on to your tax, and you still keep your personal allowance

 

I find the ATO system to be much more clear and simple to understand too. Much better than the b*gger's muddle of allowances, fudges, reliefs and all the rest of it back home

[Zman]

Zman - many thanks for the info. i wasnt basing a decision on purely just that but if i were going to be skint then there's not much point as your quality of life wont improve and thats what I'm going for. I have asked about working hours etc too as if your on 10 hours a day your life will be like groundhog day anywhere you are.

 

Thats good if the percentage is all in so to speak and the quote I got wasnt any good.

 

ps how do you consume chocolate via the internet? do you have a taste machine on USB or if importing wont it melt?

I have see its better to keep your UK accounts and buy stuff in the UK - a good example are kindle books on UK amazon and posting magazines out as there $10 plus in Perth for classic bike !!

 

Agreed. Being able to afford roughly the same things as you could in the UK is important. For us, we've enjoyed a much better standard of living - our salaries, even if converted at $2 to £1, are pretty good here but it all depends on which industry you're in.

 

As for chocolate, it would be good if I could just download it onto a USB but sadly, no, I just order stuff from the UK.

[Six it]

you need another tax advisor..

 

I have my own company contracting in O&G. I would be on the top tax rate based on my day rate etc.

But my accountant finds ways, legal of course, to make sure that i pay no more than the 32% rate.. and that not on all earnings.. thats just my marginal rate.

 

get another quote.. shop around a bit.. there are some good advantages to being a contractor, which your accountant can and should exploit

[Dave Pistol]

Do you mind if I ask what it is you do for a living?

[Six it]

i work as an environmental advisor

[Paul1Perth]

60% are you sure....if its correct that is insane, what s the se of working your butt off if they are taking that much.

 

Come on PB, you've lived here haven't you? Didn't you look into the tax rates? I'll bet you were paying nowhere near 60%. I would love to be in that bracket.

 

[h=3]Tax rates 2012-13 (Residents)[/h] [TABLE]

[TR]

[TD=width: 160, bgcolor: #3366FF] Taxable income

[/TD]

[TD=width: 340, bgcolor: #3366FF] Tax on this income*

[/TD]

[/TR]

[TR]

[TD=width: 160] 0 - $18,200

[/TD]

[TD=width: 340] Nil

[/TD]

[/TR]

[TR]

[TD=width: 160] $18,201 - $37,000

[/TD]

[TD=width: 340] 19c for each $1 over $18,200

[/TD]

[/TR]

[TR]

[TD=width: 160] $37,001 - $80,000

[/TD]

[TD=width: 340] $3,572 plus 32.5c for each $1 over $37,000

[/TD]

[/TR]

[TR]

[TD=width: 160] $80,001 - $180,000

[/TD]

[TD=width: 340] $17,547 plus 37c for each $1 over $80,000

[/TD]

[/TR]

[TR]

[TD=width: 160] $180,001 and over

[/TD]

[TD=width: 340] $54,547 plus 45c for each $1 over $180,000

[/TD]

[/TR]

[/TABLE]

[Guest TheArmChairDetective]

As someone who does contracting (as and when these days) run a Ltd company and contracted through an Umbrella Co for tax purposes in the UK I find this thread very interesting.

Are you saying that you will be paying 60% tax on your drawings or a combination of the Company tax return and your drawings?

Anyway, not knowing much about Australian Tax Law, I did a quick bit of "fag Packet" research.

 

This is a good read http://www.ato.gov.au/businesses/pathway.aspx?pc=001/003/018

As is this [LINK REMOVED AT REQUEST OF COMPANY]

 

As with all things, if you have had these figures from one "quote" then you should get a couple more from other independent's based in Australia.

I do note however that a lot of Australians do there own Tax work annualy, but maybe that's just private individuals with lots of stuff to claim.

[Guest]

Just re commenting on this thread

 

Basically after having a few quotes it seems you have to work on PAYG as its no better if you run a company due to the hassle and paying for accountants. The reason is that you have to take all the income out of the company and if your a contractor you are deemed as a personal service company so get hit for that.

 

There are ways of trying to get out of it but it looks pretty clear if you are an IT or O&G contractor you would fall under this. so if you were to earn for eg

 

1200 per day (6000 per week)

work 45 weeks a year so 270,000 per year I would only take home 190K which in my book isnt very good. You can offset a car with a novated lease and put in for other costs but it wont add up to that much.

problem is: You work as a company when you contract and the government doesnt seem to recognise this. All the marketing (mobile calls & internet), travel to interviews, computer equipment, a room in your house as an office etc you need to buy just to do your job isnt deductable on PAYG ( I dont think) basically a rough deal !

[newjez]

I worked PAYG as there seemed no real benefit to running a company. Bear in mind you will need to pay super as well - but this is no different to paying a pension. The take home seemed reasonable compared to Post IR35 UK.

 

People often buy a house as an investment, as any losses on the house can reduce their tax. The idea is you make the money on the capital gain. This is something you would have to way up - but could be an option if you were staying for a while.

[ukchris]

I had plans on contracting within Oil & Gas and setting up a company to work through.

In the UK doing this there are good tax advantages depending on how much to draw out of your company.

 

I enquired to an accountant on how much to set up & run a company or trust and was told $1900 set up and depends on how much to run. That is extorsion!!!!

I also asked (based on a day rate and normal weeks worked a year) and the figure came back that I would be paying about 61% in tax which seems way too high, how do others work there or make any money?

 

Anyone else in a simular situation?

 

If I have to pay 60% tax then I dont think I will bother. Fourty something then fine (even though not good) but at 60 surely theres something wrong, especially as its so expensive - how do people survive?

 

Am I right in thinking that you are trying to avoid paying your fair share of tax!

[fish.01]

Just re commenting on this thread

 

Basically after having a few quotes it seems you have to work on PAYG as its no better if you run a company due to the hassle and paying for accountants. The reason is that you have to take all the income out of the company and if your a contractor you are deemed as a personal service company so get hit for that.

 

There are ways of trying to get out of it but it looks pretty clear if you are an IT or O&G contractor you would fall under this. so if you were to earn for eg

 

1200 per day (6000 per week)

work 45 weeks a year so 270,000 per year I would only take home 190K which in my book isnt very good. You can offset a car with a novated lease and put in for other costs but it wont add up to that much.

problem is: You work as a company when you contract and the government doesnt seem to recognise this. All the marketing (mobile calls & internet), travel to interviews, computer equipment, a room in your house as an office etc you need to buy just to do your job isnt deductable on PAYG ( I dont think) basically a rough deal !

 

Many of those things you mention are deductible on payg. Many costs of earning an income are deductible.

 

 

http://www.ato.gov.au/individuals/content.aspx?doc=/content/00322817.htm&pc=001/002/013/012/013&mnu=0&mfp=&st=&cy=

 

 

http://www.ato.gov.au/individuals/pathway.aspx?pc=001/002/013/012/013&alias=occupations