3 ms·

Yes, what you are saying is true and that is indeed how I have worked in financial industries. I have my own ACN (C-Corp) consulting company with Indemnity/Liab

Yes, what you are saying is true and that is indeed how I have worked in financial industries. I have my own ACN (C-Corp) consulting company with Indemnity/Liability insurance through which I work. However this muddies up as I consult to a consulting company which in turn consults to the bank. I was informed by the Ombudsman that this was a common way to work in Silicon Valley and US has laws that clarifies it however Australia has not updated the laws regarding this "double employment"

brudgers 10y ago
Thanks. I tried to avoid getting too specific since I knew Australian law would be different, i.e. in the US the normal form of protection would be an LLC or an S-corp (tax pass through closely held entity) and a consulting firm in the US would very rarely be a C-corp (taxable income at both corporate and individual levels). What employment means is also different. A person consulting to a consulting company that consults to a bank would have no employment relationship with either the bank or its direct consultant. The person might have an employment relationship with their own company that was contracted to the bank's direct consultant. All of which ought to be governed by contracts...which I failed to mention, but I'd not be surprised it they were in play here.
- AussieOdyssey 10y ago
  Off topic: It would be good to have C-Corp and be taxable at both corporate and individual levels because companies pay a flat tax while individuals are tiered. This way we can choose our salary and leave the rest in company. This however severely complicates cases like mine which has three pass-thru contracts
  - brudgers 10y ago
    In the US, there is a cap on the wages to which social security tax applies. That tax amounts to approximately 15.5% of gross salary when the company portion and the individual portion are combined, the effective tax rate for an individual is much less progressive than portrayed in popular political opinion. It is also the case that control of a C-corp offers much less personal liquidity than is possible with an LLC. In addition, the layer of complexity for a C-Corp is likely to require more meaningful (from an individual perspective) expenses on legal and accounting services. All things being equal, it makes sense to optimize on taxes. Most of the time, all things aren't equal.

brudgers 10y ago

Thanks. I tried to avoid getting too specific since I knew Australian law would be different, i.e. in the US the normal form of protection would be an LLC or an S-corp (tax pass through closely held entity) and a consulting firm in the US would very rarely be a C-corp (taxable income at both corporate and individual levels). What employment means is also different. A person consulting to a consulting company that consults to a bank would have no employment relationship with either the bank or its direct consultant. The person might have an employment relationship with their own company that was contracted to the bank's direct consultant. All of which ought to be governed by contracts...which I failed to mention, but I'd not be surprised it they were in play here.

AussieOdyssey 10y ago
Off topic: It would be good to have C-Corp and be taxable at both corporate and individual levels because companies pay a flat tax while individuals are tiered. This way we can choose our salary and leave the rest in company. This however severely complicates cases like mine which has three pass-thru contracts
- brudgers 10y ago
  In the US, there is a cap on the wages to which social security tax applies. That tax amounts to approximately 15.5% of gross salary when the company portion and the individual portion are combined, the effective tax rate for an individual is much less progressive than portrayed in popular political opinion. It is also the case that control of a C-corp offers much less personal liquidity than is possible with an LLC. In addition, the layer of complexity for a C-Corp is likely to require more meaningful (from an individual perspective) expenses on legal and accounting services. All things being equal, it makes sense to optimize on taxes. Most of the time, all things aren't equal.