What are the advantages of having an ABN and working as a contractor for someone?

[Contrarian]

Seeing the wide variety of clientele with life experience here. Any advantages in this or is a bigger deal made out of it than possible? Everyone says things like you can claim this and that off tax but it'd be interesting to hear your views if you're a delivery driver/courier especially.

 

[Fudd]

...even if you have an ABN, it doesn't mean that you are self employed as determined by the ATO. I would suggest checking the ATO's website regarding Personal Services Income. The ATO also has a criteria/checklist to assist both contractors & employers in making this determination. I have seen both contractors & employers NOT checking this out beforehand and then have to deal with the fallout!

The bottom line is that you need to resolve this issue first BEFORE thinking about an ABN. If you do qualify, then I would suggest that you speak with an adviser to see which structure is better for you to conduct your business, eg sole trader, discretionary (family trust) or a company (Pty Ltd).

 

[svengali]

There is one main reason why any business needs an A.B.N.:

Under the Tax laws if a company does business with another business or contractor which does not quote an A.B.N. on their invoice the paying Company is obliged to withhold the G.S.T. amount and account to the Tax Department for it in much the same way as they handle employee P.A.Y.E. deductions. Most of them can't be bothered with this so adopt a policy of no A.B.N., no business.

The only exemption is if a contractor's turnover is under $50,000pa they can opt out of paying G.S.T. but, of course, they cannot claim G.S.T. credits for their purchases either.

You need advice from an Accountant to decide how best to structure your business.

 

[colzilla]

Think I'd rather sell a kidney than be a delivery driver/courier. Contrarian at your age just apply for the pension.

 

[Contrarian]

Hmmm, what are kidneys worth these days? Where do you live Col?

 

[colzilla]

I live in one of the poorer suburbs so kidney$ are worth f'all around here... Are your kidneys operational Contrarian?

 

[Fudd]

...The only exemption is if a contractor's turnover is under $50,000pa they can opt out of paying G.S.T. but, of course, they cannot claim G.S.T. credits for their purchases either...

...it's now $75,000pa Sven....

 

[Sammi1974]

Determining between whether your a contractor or an employee comes down to control. Here is a great link for determining contractor v's employee status
Link is broken,so has been taken down

If you've determined your a contractor, then apply for an ABN. Now just because you have an ABN doesn't mean you have to collect GST. So if your thinking I don't really want to deal with BAS and paying GST, as long as your businesses Gross Income is below $75,000 you don't have to deal with the GST aspect of being a contractor.

Hope that helps