Understanding contract rates

[Jerry Maguire]

Hi,

I have an offer in hand with 2 choices:

1) 6-month Contract rate = $600/day + GST

2) 12-month Fixed Term with $ 100k. Like a perm hire.

How do I calculate my tax dues in these choices?

Choice 1: Not clear whether GST = tax owed by me to the Govt. So, basically I pocket full $600 per day ($ 13200) and GST will be paid additional to me by my employer which I need to kinda forward to Govt as a tax.

Choice 2: http://www.ird.govt.nz/calculators/k...-tax-rate.html Just put in 100k and taxable income is given on screen. Employer, I presume, would deduct tax before salary is given.

Please advise and correct where mistaken. Rather urgent.

[Azkateaz]

GST is not the same as the taxes you would owe on your salary (PAYE taxes). So, no you wouldn't pocket the $600 a day - you'd have to pay taxes out of that amount. To determine the amount of your pay packet you'd keep you can use PAYE calculators - one example is here http://www.paye.net.nz/calculator.html, though there are others available.

Well, comparing the two offers you'd also want to factor in the value of annual and sick leave which are usually provided on a fixed term contract but NOT provided on a daily rate.

[Jerry Maguire]

Thanks for the explanation.

We've chosen the fixed term role. There are quite a few things which we just dont understand right now. We'll go with relatively safer option for now.