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What's Involved With Going "ABN"?

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  • 23-05-2018 12:04am
    #1
    KissMeArse
    Registered Users Posts: 43 ✭


    Hi all,

    Just looking for some advice and clarification from anyone who'd be more in the know on this. A friend got a job last week, the job actually pays fairly well from what she claimed ($54 per hour) especially given she has no qualifications/trades and not a huge amount of experience.

    Anyway, she mentioned the job is "on ABN" which I take it to mean that she has to set herself up as her own business and subsequently look after her own taxes and possibly superannuation? Why exactly would a company offload this to the employee, are they saving money or hassle by not having to do all of this themselves?

    I'm wondering how it works - does the company basically pay her weekly/monthly (whatever) and she basically has to sort out what is to be done with taxes or is it a case that at the end of a financial year she will get one big lump sum tax bill that she'll have to pay back?
    My thinking is that because the job seems to pay unusually well, is this because of the fact that the person has to take care of the whole tax side themselves?
    Is it a case that it's recommended to hire an accountant to look after the books? Would this be expensive? Bear in mind that, tbh, she wouldn't be one to know much at all about tax.

    I guess the reason why I'm asking is to be able to offer advice to her on the matter as she has a history of being fairly careless and reckless with money and I wouldn't want her to conveniently ignore the whole tax thing, think she's getting free/more money and then wind up with a big tax bill on her doorstep!

    Thanks in advance
    KMA


Comments

  • Options
    #2
    Noo
    Registered Users Posts: 1,986 ✭✭✭Noo


    My understanding would be that she sets herself up as her own business and the company then hire her as a contractor.


  • Options
    #3
    Peregrinus
    Registered Users Posts: 26,056 ✭✭✭✭Peregrinus


    It may be an attempt by the employer to avoid responsiblity for her tax affairs. Or to avoid her acquring the rights under employment law that she would acquire as an employee. Or to avoid state payroll tax on the amount they pay to her. Or it may be that her role is, genuinely, more of an independent consultant role than an employee role, and this structure correctly reflects that.


  • Options
    #4
    woolymammoth
    Registered Users Posts: 1,772 ✭✭✭woolymammoth


    There's no maybes or understandings about this one, your mate has an Australian Business Number, meaning she is a contractor. This won't be much different to being a contractor in Ireland. She will be responsible for her own tax, super, annual leave, sick leave, insurance, training.. the list goes on depending on the actual job. The 'employer' is effectively outsourcing that administration. I don't think she'd need to 'hire' an accountant, but maybe find one for advice and sign up as a client for tax time. There are plenty of apps that can help with scanning & tracking receipts, etc. I'd suggest heading over to the ATO website for more information on obligations under the law https://www.ato.gov.au/individuals/working/working-as-a-contractor/


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