VIC Being Charged by Agency to Pay My Tax - Deductible?

[mat41]

Hello

I am a full time contractor placed at an organisation (been here 1.5 years on rolling 1 year contracts) by an agency. I submit timesheets to agency, the agency pays me.

I had an option to be a business and arrange my own affairs or pay 2.5% to agency to take care of this. I took the latter option at the time, therefore the agency pays my tax and superannuation, etc...Is this fee of 2.5% deductible against my personal tax? I can't find any info on this on ATO site anywhere.

Should I have taken option A? Its very likely to go for another calendar year next year also. I looked at the benefits of a company. One of the main pros was a flat tax rate of 30%. When I look at my group certificate the tax paid is 29% of my gross. Am I looking at correctly? Or do I need to add 9% on what I am calling my gross for super?

Thank you for your time.

 

[Sarah J]

Hi Mat41,

It either sounds like:

1. You hired the company to handle your administrative affairs (e.g. tax and superannuation); or
2. You are actually employed by the company even though you call yourself a contractor.

The test for employee vs. contractor is actual work relationship, not the title a company gives a person, or the title onto of the work agreement. Without knowing more facts, it is difficult to say whether you are in an employment or independent contractor relationship. If it is the latter, the 2.5% fee may be deducible.

However, given that taxation law in Australia is extremely complicated, counter-intuitive at times and constantly evolving, I would speak with an accountant or taxation lawyer.