Working for rent.

Bare with me, I might come across confusing because I am a little confused.

We have until the new financial year starts to make some big choices. So I am trying to work it all out as best I can.

We rent were we are. The property is owned by a corperation but we still go through a real estate. DH has been asked by this corp if he would be interested in doing two days work a week in exchange for free rent. DH would be classed as a contractor and he would need his own personal insurance, so not actually employed by the corp.

My question is, in regards to centerlink, will this be classed as an income? I have tried looking it up but not really getting an answer. Sat on hold for 45minutes and had to hang up because life does not stay on hold for that long here.

I know it is probably a long shot asking in here but can't hurt.

Would it really be worth it? I think you need to seriously do your sums. Contracting can be really expensive - personal insurance, business insurance, work safe insurance, compliance with oh&s, doing all his own books etc, invoicing and admin, loss of superannuation, loss of other benefits - long service etc.

Definitely do sums first.

If you are only claiming ftb, it will come down to what the ato deem as income

I'm assuming he would be deemed as self employed, and would essentially have income of x amount (rent) and then deductions. So I'm with div - definitely check what the implications are financially for you guys. He may find himself working two full days and being out of pocket half the amount you would have paid in rent on "expenses" - possibly even more.

If he is interested in contract work he is probably better off with more transparency - he gets paid x amount and then you pay your rent as normal. It will be much more clear cut that way.

Okay, Thanks.

It is all a bit different and not so straight forward and as far as I know, DH was told PI would be the only one he needs. He would not be on the books and the house would cease to be too. It would also not be his only work he would also be working 3 days a week and travelling OS 18 weeks of the year (already does this part).

But your right Divy, need to sum it up and find out from an third party what insurance we would need. There was no talk that DH would actually have it as his own business, that he would actually just be trading services in a way. Does that make sense?

It sounds like they are trying to keep the rental off the books as income and keeping your DH's 2 days undeclared.

I'd be treading carefully. Get the details in an email or other and then suss it out.

If your DH is considered a contractor, he would need an ABN etc.

Sounds dodgy. If there is no paperwork, what's to stop them saying you paid no rent and owe them in 6m time?

It sounds like they are trying to hide the benefit they get from the rental property. I'd be very wary of doing anything like that. I'd also be wary of working for something that isn't declared. If you think about the value if the undeclared income in the form of free rent - you're looking at a significant benefit that may come back and bite you on the backside later.

Imagine this example - you are paying 250 a week in rent - over the course of the year, if he works for "free rent", that's 13k that you don't pay tax on. 13k that isn't declared for FTB purposes. Now taking into account the ATO can investigate going back seven years - someone makes a boo boo - you guys, them, an accountant - and the whole situation gets investigated. It comes to light after seven years that you've had this undeclared income. ATO decides to up his income, which ripples to fao for centrelink purposes and they also raise a debt...

It's something you really need to be aware of the ins and outs. If it is set up as a fringe benefit for employment and is done correctly, you can still come out ahead in taxable income and it may be worth it. But I would be making sure you check with an accountant that anything you are doing is above board and can't get your guys in trouble

Can he take a decrease in pay, and have the rent thrown in as a benefit?

Thanks for the replies. BG. That was the thought process I was trying to figure out. Thanks.

There is nothing dodgy going on, but I can see how it sounds that was. The corp that we rent off is a huge multimillion dollar type corp. They buy land for future development. How much they own is huge. They own 95% of the houses/property on our street. They rent out the houses to stop squatters taking over and to help with property management (lawns ect). If they don't have anyone wanting to rent then they simply knock down the house. So rent money is not that important to them.

Anyway. We are not trying to hide anything. We will go about it all above board. We just thought that since the two days work would equal a weeks rent we could just not pay them and they not pay DH.

DH is meeting with our accountant this week to see what he says.

I get that you are not being dodgy and neither are they. If DH has 2 days spare and wants to do this kind of work, then win/win. Maybe.

I would want to make sure you had it well written out, iykwim, so that if the current people move on, you aren't left high and dry.

We made some rooky tax mistakes and we were treated very well by the ATO. Very helpful and never made us feel like criminals or idiots (we kinda were idiots!). Talk to them if you can. You sound like you will make the right choice in the end, whatever that turns out to be.