atw: Re: Umbrella companies - ATO view on 'partnership based' arrangements
- From: margp@xxxxxxxxxxxxxxx
- To: austechwriter@xxxxxxxxxxxxx
- Date: Fri, 10 Jun 2005 13:09:39 +1000 (EST)
Wow - that's pretty heavy stuff.
Ten out of ten to the tax office though.
I felt intuitively uneasy about a partnership model I looked at some time ago.
Someone once told me that you should never go into partnership with someone you
wouldn't want to be married to - it required that kind of trust, and even then
it was a risky exercise.
Having no knowledge of other participants (partners) in advance of signing up
to a partnership with them seemed to be a path fraught with danger, even
without funny tax arrangements.
I guess the bottom line with these things is that you must be prepared to pay
the individual rate of tax on your earnings if you're working as an individual,
no matter how you organise to do that.
This has been a very useful thread for me - I have appreciated people sharing
their experience and wisdom, and have learnt much in a very short time.
Thanks!
Margaret
Quoting Stewart Walker <helpfulau@xxxxxxxxx>:
> Hi all
>
> An updated version of a post I made when this subject came up a year or
> two ago...
>
> Further to the recent discussion of umbrella companies, before hooking
> up with one, it might pay to get some independent legal and/or
> accounting advice about the legitimacy of their contractor management
> model. There is a particular partnership-based model that has been
> highlighted by the ATO for investigation as "aggressive tax planning".
> For more info, see
> http://law.ato.gov.au/atolaw/view.htm?docid=tpa/ta20024/nat/ato/00001
> and http://law.ato.gov.au/atolaw/view.htm?locid='TXD/TD200224/NAT/ATO'
> The worrying thing is that there's no real way of knowing whether other
> contractor management models might attract similar scrutiny in the
> future. In other words, perceived short-term tax benefits (or even just
> a desire to escape red tape) could expose you to increased attention
> from the ATO and a possible future tax penalty nightmare...
>
> A nice happy note to end on :-)
>
> Cheers
>
> Stewart (who has his own company but sometimes wonders if the grass is
> greener with contractor management companies)
>
>
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