Hi

Is it possible to work as a sole trader and still receive part of you salary as LAFHA. I think that once an employer agrees to pay you LAFHA and they pay the relevant FB tax, you could work as a sole trader and just complete one tax return at the end of the finanical year.

I ask this beacuse at the moment i am working through a recruitment agency plus an umbrella company. Overall between the two of them, they are taking at 30% of my income. I was wondering is there any need for the umbrella company. Could i just set up at a sole trader and still receive LAFHA if the company i work for agreed to it.

Any insight on this would be great

Cheers
Paul

Not sure about your LAFHA question, but out of interest who is the sponsor of your visa ?? The recruitment agency or the umbrella company ??

Hi

The recruitment agency is my sponsor. They then said that i need to go through the umbrella company to operate as a contractor is Australia. I hear different stories from different guys in the office about their set up as a contractor but hard to get and solid info. I think i will just get from advice from an accountant.

quote:

Originally posted by colinhanna:
Not sure about your LAFHA question, but out of interest who is the sponsor of your visa ?? The recruitment agency or the umbrella company ??

I used to be a contractor until a few months ago. I was employed by an agency who were also my sponsor (as is required by law) and then I was contracted out to Qantas and later to another company. Don't see why you have to use the umbrella company - who pays you ?? What is the relationship between the company you actually provide services to (in my case this would have been Qantas) and the agency and umbrella company ?? Reason I ask is that my original 457 visa was declared to be invalid as the agency and umbrella company I had worked for had effectively broken immigration rules.

The umbrella company pays me. The company i am actually providing services for was simply recruiting people from Ireland because of the skills shortage here. I had a phone interview, company liked me so the agency went ahead and sponsored me and got me to australia. The agency just said that i need to go to this umbrella company to be tax compliant while working here. Personally i think it just makes it easier for them. I send my timesheet to the umbrealla company each week, they invoice the company i provide serices for and the company pays them. The umbrella company then send the agency their percentage, deducts all taxes and i get nett payment each week.

You are correct, i see now that the umbrella company is not needed. hindsight is a great thing eh. The only thing i need to confirm is can i still receive lafha if i act as a sole trader.

BTW, can you tell me how specifically your immigration rules were broken.

There is a requirement of the 457 visa which has always been in existence but DIMIA were not enforcing it for a while - but then they decided too and gave all uncompliant visa holders a few months to get things in order. Basically my arrangement was that I was sponsored and paid by the umbrella company, then contracted by an agency to Qantas (the 'end user'). My timesheets went to the agency (and the umbrella company) who then took their cut and passed the rest to the umbrella company who then took their fee, the tax and adjusted for LAFHA. Then they paid me. However the problem was that DIMIA require that there be a contractual agreement in place between the sponsor (in my case the umbrella company) and the 'end user' (Qantas). Of course there wasn't - it was between the agency and Qantas ! My agency then had to sponsor me (which cost me as well as them and Qantas) and then umbrella company were no longer involved. The agency couldn't do the LAFHA bit either, but by then we had also declared our intention to stay in Oz by applying for a 136 (Skilled Independent) visa which meant we could no longer claim LAFHA anyway.

Anyway hope this essay answers your question.