Working as a contracter? Better tax?

[Gtx Gaming]

So I had quite a interesting interview last night.

This company from the Uk employs most of it's SA staff on a contract basis to save on tax. You still get leave days bonuses etc. Not sure if this even legal, but they have been in business for very long time in the UK and SA.

The manager also said, I would pay less tax this way also.

I really don't see how I save on tax, as still need pay the PAYE rate as this would be my only client? Unless I pretty much deduct as much as I can, travel allowance etc?

The main reason why I am looking at working for them is, that I can go work in UK branch after a year or so. They actually employ mostly SA staff, even my interview was in Afrikaans. They also a Tier A visa sponsor in the UK.

 

[xrapidx]

You'd be saving by deducting as much expenses as you can.

I used to get about 1/3 of my money back. (home office expenses, traveling expenses, write off your car, etc)

I stopped because claiming became a real pain in the arse each year with changes - and if you're claiming a lot - its probably better to get an expert to do your tax.

 

[Gtx Gaming]

You'd be saving by deducting as much expenses as you can.

I used to get about 1/3 of my money back. (home office expenses, traveling expenses, write off your car, etc)

I stopped because claiming became a real pain in the arse each year with changes - and if you're claiming a lot - its probably better to get an expert to do your tax.

Thanx

Had a look on https://www.taxtim.com/za/calculators/travel-allowance

Considering the daily commute would be 60km then I added the fuel, insurance and the interest on the finance to the calculation it would seems to cancel out all the tax I would need to pay for the year.

The commute would be around 15k km a year.

Yeah will get someone to handle the tax for me.

 

[xrapidx]

You can also write things off against your income over a period, e.g. vehicle (think it was over five years), office equipment (think it was over three years), etc...

Also - I think it was more beneficial to lease vehicles instead of a loan purchase.

Been awhile since 2012

 

[HavocXphere]

Just remember...no UIF and pension and what not so you need to cover that yourself. So the salary needs to be correspondingly higher

As for tax - yeah more deductions available...but also a lot more scrutiny from SARS. SARS knows perfectly well people take chances on this so it pretty much guarantees you get lots of extra SARS love. And not the "submit an invoice" type...e.g. if they think you're taking the pi.ss on home office deduction they'll show up to inspect.

oh and tell UK co you want them to pay for fibre internet

 

[Stefanmuller]

Go read up on Independent Contractor definition if you are worried. Basically you will have to prove that you are not nust a bona fide employee of the company ie. work under their supervision, their time, their premises, using their office supplies, earning fixed salary etc.

 

[^^vampire^^]

You'd be surprised how many overseas businesses hire people in South Africa as contractors (or full time employees). They are effectively charging local companies (in their country) the usual rate which takes into account things like paying staff min wage or higher while forwarding that cash to South Africa to pay the devs. This effectively increases your business turnover 100%.

In Australia for a good dev you will pay between $110k - $150k+. In South Africa you will most likely pay half of that. Try do some independent checking on other people who have worked for the company and moved over; they might just be saying it's an option but stonewall you later. When I was looking to move to Aus a few years ago many companies were very interested in employing me while in SA but wouldn't entertain having to employ me in Aus as it increases their cost massively.

 

[Gtx Gaming]

You'd be surprised how many overseas businesses hire people in South Africa as contractors (or full time employees). They are effectively charging local companies (in their country) the usual rate which takes into account things like paying staff min wage or higher while forwarding that cash to South Africa to pay the devs. This effectively increases your business turnover 100%.

In Australia for a good dev you will pay between $110k - $150k+. In South Africa you will most likely pay half of that. Try do some independent checking on other people who have worked for the company and moved over; they might just be saying it's an option but stonewall you later. When I was looking to move to Aus a few years ago many companies were very interested in employing me while in SA but wouldn't entertain having to employ me in Aus as it increases their cost massively.

Indeed nothing like cheap labour to save on money.

I don't have the numbers yet, but it should be around 100k zar a year saving employing staff here, excluding the tax benefits for them.

I will probably visit the offices this week and have chat with employees and discuss money to see if the position is worth it.

 

[Bobbin]

Down side might be higher interest when taking up finance on a vehicle or something like that. The "permanent employee" status is seen as lower risk for the banks not so?

 

[xrapidx]

Down side might be higher interest when taking up finance on a vehicle or something like that. The "permanent employee" status is seen as lower risk for the banks not so?

Depends on what you're earning - and how consistent it is.