Working as a contractor tax q

S

settlement

Registered User
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I suspect i know the answer here but throwing it out there just in case.

I work as a contractor and my insurance is taken 'at source'
eg if i make 5k in a month, the client takes out 500 for insurance, and so I get 4.5k into my account.

I assume it is the full 5k that is taxable even though I never 'saw' it?
 
What do you mean by "insurance"?

Also, be careful - Revenue have strict rules defining who is a contractor v employee - do not fall on the wrong side

If your "customer" is deducting PRSI and Tax , then he is probably your "employer"
 
settlement said:
I work as a contractor and my insurance is taken 'at source'
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Is it Professional Services Withholding Tax (PSWT) you are talking about?

Professional Services Withholding Tax (PSWT)

Information for companies withholding Professional Services Withholding Tax
www.revenue.ie

If it is, you declare income of €5,000 in your income tax return and take a credit (€500) for the tax withheld, obviously multiplied by however many months you work for your client in the tax year.
 
I work on contract, what type of services is this, what is insurance exactly.

In my scenario this would be the commission that my agency takes, so they charge the client a higher daily rate than I receive. I invoice the agency, not the client directly therefore.
 
settlement said:
I've got a new job which means I'm working as a doctor doing consultations for a company.
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settlement said:
From the POV of my new job, all I can say is that they arrange my medical indemnity and deduct it from my invoices.
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It looks like it is medical indemnity insurance cover that your client deducts.

€5k is your gross income. You take a deduction for your expenses of €500. Your taxable profit for the month is €4,500 which is subject to income tax, USC & PRSI (assuming there are no other deductible expenses pertaining to your sole trade).
 
thanks, it is medical indemnity. so it is not like a commission
 
Interesting. You are right - med indemnity. So even though it is simply an expense which I am taking at source, I am still only taxed on the 4.5k? Interesting and good news for me
 
Hmm - sounds odd - when I worked on contract for public sector organisations professional indemnification was part of the "package" offered by my umbrella company. The cost was included in the 5% or fixed rate cut I had (I moved from a percentage arrangement to negotiated down and finally switched to a fixed rate provider). You might want to get a full detail from your agency of what they are deducting and charging you as you can usually set this off against your own tax - unless they are already doing this for you?
 
Admittedly it's quite expensive, more expensive than being an employee and also when I was an employee my employer paid it. I dont think there is much detail, I am simply charged per hour for medical indemnity
 
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