atw: 80:20 rule ... How come nobody gets it?

Hello,

This is pretty much a rhetorical question, because I'm more interested in a
solution rather than the problem.

I keep hearing about the 80:20 rule in respect of "unrelated clients",
whereby most folks (especially recruiters) think that everything is sweet as
long as a contractor does no more thn 80% of his/her work through a single
agency in one financial year. Unfortunately this is only partly true.
They've stopped reading before they get to the second paragraph:

"Do not count clients obtained by putting your name with a labour hire firm,
placement agency or similar organisation."

(for anybody who is interested, this can be viewed at
http://www.ato.gov.au/businesses/content.asp?doc=/content/13051.htm)

Bottom line: if you work only through an agency, you don't have any legal
recourse to pre-tax income distribution, company vehicle costs, or any of
the other normal business expenses (but I'm not an accountant so don't read
this as advice).

I think there are some reputable recruiters out there who are providing a
worthwhile service (and some who are not). But there needs to be a way for
service businesses to work with them and keep the ATO happy. I feel like
Robinson Crusoe on this because the reaction I get from most recruiters
varies between surprise and indignant denial (e.g. "we have XXX contractors
on our books and nobody has ever mentioned this before").

I've found a couple of smaller agencies who I can work with on this, so they
do exist. I'm interested in business models that others have found to be
successful (and legal).

cheers
Colin Dawson

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