Hello,

I am a software developer contractor for $700/day and my partner is not working at the moment. Can I hire her for $200 / day , is that legit ? What are the options (have her own ABN , need to pay super ) ?

Thanks

Hi Eugene

If she can help you with the work then yes you can hire her and there is nothing preventing you from doing that. If however you just pay her the wage and she doesn’t do any work, you might be seen as being involved in a tax avoidance scheme.

You will need to treat her like any other employee you would have had. So yes super, WorkCover, etc would be applicable too.

Hope this helps.

Your income is Personal SErvices Income (PSI).
your tax deductions in respect of PSI are limited to the same sorts of deductions that you would have if you earned a salary.

The ATO is almost certainly going to see straight through a "wage"paid to a spouse. Morevover, it creates a superannuation liability and also a workers comp issue that you need to address.

Also bear in mind that the ATO has a long and illustrious list of IT professionals who have sought to dodge a bit of tax by means fair and foul......so if you put software developer on your tax return you can be confident that your return is getting more than just a little glance at the ATO....so if you are stretching the freindship then the ATO will find out eventually and spank you soundly for it. They know all the tricks so be careful about what you try to get across the line.

So, whilst on the face of things you can easily squirrell some income across to your spouse, its not that simple. Go find yourself a bean counter who understands the PSI regime and how you can best manage tax without dropping yourself in the poo with the ATO...

regards
BC