Canberra’s economy and its IT market are unique in Australia. The federal government has a large footprint in Canberra, which creates lots of employment and IT outsourcing opportunities.
Every year the government and private sector are both launching large IT initiatives. This can be great news for IT Professionals living in Canberra. With a shortage of skilled workers, experienced IT professionals are always in demand in Canberra. This high demand creates opportunities for Contractors.
Going from a permanent job to a contracting role can be exciting and scary all at the same time. Many people take the leap because of the extra money they earn for their skills. IT Contractors often get paid 30%-60% more than the permanent staff.
This pay increase is substantial for most people, with more money you can afford a better lifestyle, pay off your debts/home loans. So, if you are looking for a job change or searching for an opportunity to make more money, then Perhaps you should consider switching to Contracting.
Now, when you are new to contracting, there are plenty of questions that often aren’t easy to find a straight answer to.
How will you get paid? Do you need to put into Superannuation? What about your expenses? Or insurances? What is salary sacrifice? How do I pay PAYG, FBT, GST, and taxes?
Here are the Top 5 common questions I get from contractors moving from a permanent role to contracting:
Q1) Is Now, a good time to begin contracting?
There is no foolproof way to predict the future. However, if you possess in-demand skills, excel at your job, and have strong professional connections, you are likely to succeed in IT contracting. I have personally known IT contractors who have thrived in the industry for more than two decades.
To make an informed decision about pursuing new opportunities in IT contracting, it’s important to carefully examine the job market, weigh the advantages and risks of the potential new position, and have a plan B in case things don’t work out as expected. This includes considering factors such as the demand for your skills, the potential for growth and advancement, the company culture, compensation and benefits, and any potential risks associated with the job or company. By carefully evaluating these factors, you can make an informed decision about whether pursuing the opportunity is the right choice for you.
Making the transition from a permanent position to a contract position can be both exhilarating and frightening. However, it’s important to remember that every phase of life comes with its own challenges, and the beginning of any new journey can be difficult. Once you take the first step, however, it’s often hard to look back. While there may be some adjustments and uncertainties along the way, embracing the new opportunities that come with contract work can lead to greater flexibility, new experiences, and the potential for greater professional growth. So, don’t stress and approach the transition with an open mind and a willingness to learn and adapt.
Q2) Which is better contracting with Government Departments or Private Companies?
Every Government department and company is unique, so there is no one-size-fits-all answer when it comes to deciding between government and private contracting. Both options come with their own set of pros and cons. Ultimately, the decision may come down to the project you will be working on and the team you will be working with.
Government projects typically have long-term funding and are considered to be safer options. However, the downside may be that your role is limited to specific technical areas, which may become monotonous over time.
On the other hand, private companies may push you to work harder and maximize the value of each hour they are paying you for. This is especially true for small companies, but larger companies may offer a better work-life balance.
During an economic boom, contracting opportunities may be abundant regardless of the sector. However, during a recession, government sectors such as Defence may offer more stability.
Q3) As a contractor, do I require the services of a payroll services company?
When starting your first role as a contractor, Often people have lots of questions like How will you get paid? Do you need to put into Superannuation? What about your expenses? Or insurances? What is salary sacrifice? How do I pay PAYG, FBT, GST, taxes?
When you are working as a permanent employee, your employer divides your pay into the many components you specify, including superannuation, tax withholding, and payments into designated accounts and to ATO.
Now as a Contractor, you need to manage and fulfill your insurance, tax, legal and super obligations.
This is where we can help, As a payroll services provider we manage your insurance, tax liabilities, deductions, pay into your superannuation account, manage any items covered by salary sacrifice, and make sure you get payslips on a regular basis and a PAYG Summary at the end of the fiscal year.
Using a payroll services provider gives you simple control over your finances and more time for what is important to you.
Q4) Can I salary sacrifice my vehicle?
Yes, you certainly can!
Buying a new or used car with your pre-tax income is a popular method of salary sacrificing because you can roll your vehicle expenses into a single payment that is deducted from your salary before tax. This method of salary sacrificing is called a novated lease.
Don’t forget, From 1 July 2022, new electric vehicles under the luxury car limit are exempt from fringe benefits tax. This means an electric vehicle under $84,916 can be salary packaged for a substantial tax benefit.
Free Payroll Calculator
If you want to calculate your estimated income, super, or tax liability, try using our free online Payroll Calculator. It’s a quick and easy tool that can help you get a better understanding of your financial situation. Simply enter your Hourly Rate, Weekly hours and the calculator will provide an estimate based on current tax laws and regulations. Give it a try today and see how much you could be earning or saving! Try our free online Payroll calculator.
If you are looking for a payroll service provider, contact our office for a free obligation free consultation. We pride ourselves on offering the best service at affordable prices.