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Thread: About IT Contract_urgent

  1. #1
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    Default About IT Contract_urgent

    Hello,

    I recently got an IT contract for 3 months in NZ.

    Is there someone tell me for the IT contract, it should be an employee contract or an agreement for provision of services?

    As the company gave me an agreement for provision of services for 3 months and I have to work as an independent contractor to pay service tax and income tax ,besides, I have to provide invoice by myself.

    Is this the normal IT contract ?

    Thanks

  2. #2
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    Yes, as a contractor you are not an employee so you are responsible for your own business taxes and legal obligations. What visa do you have?

  3. #3
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    Hello Eternalkiwi,

    I hold the Silver Fern Visa and just got to NZ.

    May you tell me somethiing on this kind of contract? like how to get invoices by myself? I am just a computer engineer and just got here.

  4. #4
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    You can use an invoice template. You can ask the company if they have any a standard template you can use.

    They may also have a time-sheet template.

    Some companies require you to get your manager to sign your time-sheet every week. You have to ask.

    As a contractor, you are your own business. You have tax-deductible advantages and thus, have the ability to use pre-tax dollars to invest in your career/business.
    Please see IRD website ird.govt.nz (Inland Revenue, which is like Income Tax Department). You can join another company or you can create your own company.

    In general my advice is not to worry, and if you don't know about anything you can ask your employer, I find they are very helpful.

    Some more general info....

    As a business (either as a Sole Trader or Limited Company), you now have tax responsibilities in filing GST returns, provisional taxes and your own end-of-year taxes.
    If you do your financial homework well, you can save more money as a contractor while employed. IRD runs seminars to teach you regarding these things, please attend when you come here. They are very helpful and free of charge.

    From Google: (may not be complete, but may give a general idea)
    Advantages of Contracting

    More money – Due to the short-term nature of the work, most companies will pay substantially higher rates.
    Tax Efficient – Contract work can be more tax efficient than salaried employment assuming organised tax planning through the contractor’s business.
    Experience – Contractors are generally more marketable due to their exposure to a wide variety of systems and organisations.
    Self-Training – Contractors can chose their own form of training and hence keep abreast of leading technology.
    Flexibility – Contractors can change positions on a regular basis. The more flexible your attitude towards location and type of work, the easier it will be to find interesting contracts and continuity of work.
    Independence – A contractor is his or her own boss.
    Company Politics – Contractors usually do not get involved.
    Holidays – With no fixed dates for holidays, contractors can take extended holidays between contracts.
    Travel – Experienced contractors can market themselves worldwide and take up short-term contracts anywhere.
    Social – Contractors meet all sorts of new people on different assignments.

    Disadvantages of Contracting

    Tax – Contractors are responsible for all tax payments, and must pay on time or face interest and penalties.
    Paperwork – Contractors must keep records of all transactions so they can prepare Income Tax and GST returns.
    Training – There is usually no in-house training provided to contractors.
    Involvement – A contractor is not usually involved in management decisions.
    Adaptable – Contractors must be very adaptable to changing environments.
    Insecurity – Contracts are for specific periods of time and tend to range from 3 months to 1 year.
    Social Welfare – Contractors do not receive pay-related social insurance payments such as sick pay or unemployment benefits.
    Holiday pay – Contractors receive no remuneration for holiday periods.
    Legislation – Contractors are not protected by current legislation offering certain rights to employees.
    Accountants – In most cases, it is advisable to appoint an accountant who will charge you for their services.

  5. #5
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    Thanks for the reply in detail

    The contracts in IT are all the service agreement of independent contractor?

  6. #6
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    Contracting is common (as an independent, meaning you run your own business rather than being an employee) if I understand your question correctly. Also, Fixed Term is common. I believe the UK is somewhat similar in this respect.

  7. #7
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    Quote Originally Posted by Sabrina View Post
    Hello Eternalkiwi,

    I hold the Silver Fern Visa and just got to NZ.

    May you tell me somethiing on this kind of contract? like how to get invoices by myself? I am just a computer engineer and just got here.
    Silver Fern Visa has restrictions and contract work may not count for further extension as conditions on SFV is for permananet job or ongoing job for 24 months....
    So please check details on your visa before starting on contact work... if you have any questions , plz feel free to PM me.

  8. #8
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    I just asked the immigration of NZ, the holder of SFV can find the job working as a freelancer.

    The key issue here is I came to here on Oct of last year and my visa is only for 9 months.

    And I have to set up a business of myself and pay all the tax procedures for this 3 months contract which seems kind of complicated to me, a stranger of here.

  9. #9
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    Quote Originally Posted by Sabrina View Post
    I just asked the immigration of NZ, the holder of SFV can find the job working as a freelancer.

    The key issue here is I came to here on Oct of last year and my visa is only for 9 months.

    And I have to set up a business of myself and pay all the tax procedures for this 3 months contract which seems kind of complicated to me, a stranger of here.

    Hello Sabrina,

    It does seem strange... but look on the upside... you're setting-up shop on your own. It's something to learn and adapt to, but if you are able to leverage from it... it might also be a good thing. You might end up, creating your own IT services shop... ....

    G'luck...

  10. #10
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    Operating a business is reasonably straight forward in NZ, and certainly a lot easier than many other countries.
    Inland Revenue also provide the very useful Smart Business Guidebook, and have specialist staff who can answer your questions.

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