FAQ

Contractors

What is a contractor?

According to the Tax Payers Association of Australia, an independent contractor is no different to any other business, and just like any other business, you can operate as a sole trader, or through a company, trust or partnership. A contractor invoices for services rendered, provides their own insurance cover for things like public liability or accidents, and will generally have to supply and maintain tools and other equipment. Thus tax requirements come into play.

By definition of contract, it is an agreement to complete a task or provide a certain result through an independent service provider’s effort and discretion. The contractor’s cost/ benefit assumption is expected to be derived directly from the completion of a specific project or service for a client. There are no guaranteed minimum terms and working conditions, and tax obligations are the contractor’s responsibility, such as GST and PAYG if you have employees.

Why hire a contractor?

Contractors become the most convenient answer for employers whose requirements are not necessarily their core services. Contractors of highly skilled jobs are becoming entrenched in Australia’s workforce as one of the most cost-effective solutions to short term or temporary project-related work load that may fluctuate in a given period of time. The employment relationship of getting a contractor will be the logical and cost-efficient solution. As a result there has been a growing demand for contractors in Australia.

Why become a contractor?

A contractor’s independent work life may appear somewhat more flexible than employee, not needing to show up to a regular office in uniform and what-not. Being able to work in your own space allows some variable conditions to be in your control (i.e. possibly break hours, attire, and physical location). However this does not mean that the responsibilities are any fewer or any less significant.

What are the advantages of using Independent Payroll Services?

• Expert advice on salary packaging
• Online Sign up using EchoSign
• Timely and accurate payments to contractors
• Compliance with all ATO and DIAC requirements

What are the insurances covered by Independent Payroll Services?

• PI: Professional Indemnity – cover for claims brought against the policy holder due to their professional negligence.
• PL: Public Liability –  for individuals and business owners generally including all exposures for property damage and bodily injury
• WC: Workers Compensation – the laws and regulations which establish liability of employers for injuries, harm or illnesses to employees while on the job or within the workplace.

What are the inclusions of the Salary Packaging service?

• Fringe Benefit Taxes (FBT) Exempt Work related Claims
• LAFHA (Living Away from Home Allowance)
• Novated Lease
• Salary Sacrificing to Superannuation

What is LAFHA?

What is Novated Car Lease?

What are the other benefits of getting a novated car lease?

What is salary sacrificing to superannuation?

Contractors may choose to put away more towards retirement by volunteering to sacrifice salary into superannuation fund. The tax paid to the ATO by the superannuation fund is at a much lower rate than from normal income.

FBT Exemption Benefits

What are Fringe Benefit Taxes (FBT) Exempt Claims?

Fringe Benefits Taxes Exempt claims offers savings on tax for work-related items, example:

• Laptop
• Mobile
• Briefcases
• PDAs -portable digital assistants (including software, portable printers, calculators, electronic diaries)

What supporting documents do I need to claim FBT exempt benefits?

Tax invoice and proof of payment. Travel overseas will also require all boarding passes. These documents must be signed by you and an endorsement written across each stating ‘claimed for salary packaging through Independent Payroll Services.’

Must FBT exempt claim items be for work purposes?

Yes, all items except those for overseas travel and child care must be 100%
for work purposes.

May I purchase multiple FBT exempt items?

Yes, for all items except a laptop, you may purchase as many items as necessary.
Laptops may only be purchased once per FBT year, 1-April to 31-March

May I purchase used items or items from eBay?

Yes to both, as long as you can provide a tax invoice and proof of payment.

Must I be a temporary resident to get a tax reimbursement on overseas holidays?

Yes, or have travelled while overseas for your employer.

How often may I claim travel overseas?

Once per FBT year, 1-April to 31-March

Recruitment Agencies

How does the payroll process work?

Behind the scenes, there is a team of professionals managing and processing your contractors timesheets & payroll. With a large contractor base at Independent Payroll Services, pay batches are processed everyday to ensure everyone gets paid promptly.

Why should we outsource our payroll and salary functions?

• Significant skills, knowledge & resources are needed to take on administratively managing a company’s payroll as items regarding statutory and taxation requirements become key to ensuring that the company keeps up with routine updates. These support functions that likes of financial management, administrative support and continuous training on taxation and regulations may not be your main line of business. These should not limit you as a company.
• Independent Payroll Services’ back-office recruitment solutions that include outsourced payroll will allow your recruitment agency to focus all your efforts, resources and manpower on functions that directly contribute to your top line. The affordable rates and savings incurred from our services also help improve your bottom line as well.
• Independent Payroll Services will contribute dedicated professionals with specialized skills and the supporting infrastructure that enables your recruitment agency to expand and flex as defined by your strategy. This will mean taking fewer risks while increasing productivity.
• Reduce your risks as a recruiter. Taxes, Fringe Benefit Tax (FBT), insurance and paid leaves are but some of the risks taken by an agency as the company continues to source out talents for clients. Independent Payroll Services offers top-of-the-line back office payroll solution for the outsourcing of any industry’s financial payroll administration.
• Streamline how your mange your contractors with
  • Efficient contract generation
  • Verified timesheets
  • Live reporting
  • Establishment of recruiter key performance indicators (KPI)
  • Have the flexibility to provide margin & commission calculations

What benefits do I gain from outsourcing my payroll?

• Streamlined process and superior service (less paperwork/ more efficiency)
  • Automatic coverage for insurances as required by law
  • Payroll administration covered by Independent Payroll Services, according to their respective structures i.e. PAYG tax, superannuation items and net salary
  • Lower costs & higher returns for the agency & contractors
    • Center of dialogue for best payroll options
    • Defined salary structuring inevitably increasing take-home pay
    • Potential tax returns for contractors included in the service
    • Save on payroll taxes in double digits per annum
    • Risk and access management
      • Access to information online or through our customer service hotline
      • Allow Independent Payroll Services to manage employment risks for you through reduced exposure