Accountant for IT Contractors in Melbourne
Contracting through an agency or direct to a client? We set up the right structure, get the personal services income (PSI) rules right, and handle your GST, BAS and tax return so you keep more of your day rate.
The short answer
Most IT contractors don’t save tax just by using a company. If you work mainly for one client, the ATO’s PSI rules usually mean the income is taxed as yours anyway. The right setup depends on how you work, who your clients are and your plans. We check this first, then set up the structure that actually helps.
What we help with
PSI check
We run the results test and the 80% rule against your contracts and tell you, in writing, whether the PSI rules apply.
Structure
Sole trader, company or trust. We compare tax, cost and paperwork and set it up, including ABN, GST and bank feeds.
GST & BAS
Registration once you pass $75,000 a year, invoicing that agencies accept, and quarterly BAS lodged on time.
Deductions
Home office, laptop and gear, software, training, insurance and travel between client sites, with records that hold up.
Super & cash flow
Paying yourself super, using carry-forward concessional caps, and setting aside tax so the bill is never a surprise.
Year-end
Company and personal returns, Div 7A loans, dividends and director fees, all planned before 30 June.
How the PSI rules work
Personal services income is income that is mainly a reward for your own skills and effort. If you earn PSI, the rules can apply even if you invoice through a company or trust.
- Results test. If at least 75% of your PSI comes from contracts where you’re paid to produce a result, supply your own tools, and must fix defects at your own cost, you pass and the rules don’t apply.
- 80% rule. If you fail the results test and 80% or more of your PSI comes from one client (and its associates), the rules apply unless the ATO gives you a personal services business determination.
- Other tests. If under 80% comes from one client, you can pass with the unrelated clients, employment or business premises test.
If the rules apply, you can still run a company, but you can’t split income with family or claim some expenses such as rent for your home. Typical agency contracts paid by the hour or day often fail the results test.
Sole trader or company?
| Sole trader | Company | |
|---|---|---|
| Setup and yearly cost | Low | Higher (ASIC fee, company return, director ID) |
| Tax rate | Your personal rate | 25% base rate entity or 30%. Extra tax when you pay yourself, if your rate is higher |
| When the PSI rules apply | Little difference | Income is taxed to you anyway |
| Liability | Personal | Limited, though agencies often ask for insurance |
| Best for | One main client, starting out | Several clients, a real business, staff or products |
Why IT contractors choose us
- Fixed fees agreed before we start. No surprise bills.
- Plain-English advice on your actual contracts, not a template.
- Cloud bookkeeping with Xero or MYOB and app-based receipts.
- Partners who answer your calls, in Ascot Vale and Mount Waverley or online anywhere in Australia.
Thinking about super or an investment property? See our investor tax page.
Frequently asked questions
Do I need a company to work as an IT contractor?
No. Many agencies accept a sole trader with an ABN. A company only helps if you pass the PSI rules or are building a real business. We’ll compare both for you.
Do the PSI rules apply to me?
They usually apply if you’re paid by the hour or day and 80% or more of your income comes from one client. You may still pass the results test. We review your contracts and tell you in writing.
When do I need to register for GST?
When your turnover reaches, or is expected to reach, $75,000 in a 12-month period. Once registered you add 10% GST to your invoices and lodge a BAS.
Can I claim my home office?
Yes, if you work from home. You can use the ATO fixed rate per hour worked or actual costs, and you need records such as a timesheet. Rent and mortgage interest usually can’t be claimed if the PSI rules apply.
Should I pay myself super?
It’s often a good idea. Contributions to super are usually taxed at 15% and you may be able to use unused caps from the last five years. We’ll check your balance and caps.
How much do you charge?
We quote a fixed fee after a short call. Fees depend on your structure and how many returns we prepare.