Case Study – IT Contractor Solution

Background
Richard Hamilton is a professional IT contractor who travels from Melbourne to Sydney fortnightly for work. He stays in Sydney from Monday morning to Thursday evening were he returns back to his family in Melbourne and works from home on Fridays and the following week working in the Melbourne office.

The problem
With the current arrangement Mr Hamilton is incurring a lot of expenses, paying for accommodation in both Sydney and Melbourne, travel expenses and general business expenses. With the client paying Richard on a monthly cycle, under the circumstances he felt the need to require a more frequent payroll arrangement.
Summary of requirements:
- Wanting to claim for expenses
- Compensation for dual living expenses
- Salary packaging arrangement
- Salary sacrifice to maximise amount into superannuation
- Client pays invoices on 30 days in arrears but contractor needs money in his account sooner.
- Wants to increase net income.

The SDP Solution
Under the complexity of the requirements Richard did not think it would be possible to cover all his requirements – thinking he was chancing his arm. However when Richard got in contact with SDP we sat down, met for a coffee and went through each process of his work arrangement and proposed the following;
- Tailored salary packaging service; enabling to claim all standard work related expenses; including phone and internet and purchase of his new laptop.
- Even though his car was fully paid off SDP suggested to package car with an associated lease arrangement. Whereby the car would be leased from contractor’s partner and back to the contractor on a leasing arrangement. So that the contractor would not have to go under new finance
- Tax free travel allowances – all abiding to ATO guidelines
- Free tax advice
- Net income increased through legal tax minimising strategies
- Contractor preferred to be paid fortnightly so SDP facilitated this requirement
- Simple management of expenses and claiming reimbursements
- Provided complete contractor management solutions at a competitive and reasonable price

Results
After just the first month Richard was reeking in the benefits; he was surprised on how much his income had increased and that his expenses were deductible from his gross earnings.
- The contractors net income increased by 17.5%
- Lifestyle expenses were paid from gross as against from net.
- With using salary packaging amount an additional $12350 was paid towards superannuation.