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IT contracting - personal services company vs agency direct

Discussion in 'Property Finance' started by Mooze, 19th Dec, 2015.

  1. Mooze

    Mooze Well-Known Member

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    Hubby has left his salaried IT position to contract again. We've got two options for pay - personal services company vs agency direct
    PS take a few dollars per hour out of his rate but can provide a letter of salary, tax variation each week against claimable items (IP interest etc), and on going employment statement if he changes contract employer

    Agency - no cost to him

    We're hoping to purchase in the next six months - given the APRA changes would the PS items still be advantageous ?
     
  2. beachgurl

    beachgurl Well-Known Member

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    Hi Mooze :) my husband had the same dilemma last year - go fully self employed via a recruiter or have them act as his employer with payslips. We went with the payslip option. The lenders we've recently gone with have accepted the payslips along with long term history of employment in the IT industry as if he was a PAYG employee. Much less headache than going down the self employed route or any need to wait for the minimum self employed time periods imposed by the lenders.
     
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  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Tread carefully - if he is paid as a PAYG (i.e. a payslip) then no problems although some lenders like Bankwest will require 6 months employment if you are paid via a recruiter even at 80% LVR. Most lenders will be ok with a PAYG Contractor though.

    The other thing to consider is the probationary period if that applies.

    However if he is paid to an ABN then lenders are going to treat him like a self employed applicant and thus will require at least 1 year employment and financials.
     
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  4. Mooze

    Mooze Well-Known Member

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    Thanks
    The personal services company places him in an already established company - not his own abn- so as he changes who he contracts to his "employer" stays the same
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    That may be able to be sold to a lender, best done so at less than 80 %

    ta
    rolf
     
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  6. R.B.

    R.B. Well-Known Member

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    @Mooze. I have done contracting for a while, exactly the same as what @beachgurl said. They looked at the history of employment, and I have been in the same career for a while. I have applied for the loan 6 months after getting contracting payments.

    My accountant managed to create a company, and I became the director of the company. I went this path, as I was travelling a lot, and lots of expenses had to be claimed.

    hope this helps

    Thanks
    Ramez
     
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  7. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Very shaky grounds here. If you're planning to purchase in the next 6 months, go direct and get a payslip. This makes finance easy. If you go via a personal services company the odds of a successful finance application are at best marginal within the first year or two.
     
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  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    There would be no tax savings with setting up a company for PSI services. Downsides with finance and extra costs.