Tax, super and insurances: what you should know
If you are now a part of our Better Caring community of care workers, and offering your services as a self-employed worker, you will need to remember to take control of your own tax and super. Read our quick guides below to find out how.
Keep track of your tax requirements
Being a self-employed care worker means that your income may not be consistent from month to month. It may be difficult to pay tax bills in bulk once they are due, so to make life easier, we recommend that you put money aside each month. Please note, if you do not meet your tax obligations, you could be at risk of a heavy fine.
How much tax do I need to pay?
If you are unsure of how much tax you need to pay, there are a number of income tax calculators available online. Check out Money Smart’s online income tax calculator or the simple tax calculator accessible on the Australian Tax Office’s website to work out how much money you will need to put away.
As an independent worker, you will need an Australian Business Number (ABN). If your business is also registered for Goods and Services Tax (GST), remember to set money aside for this too, although keep in mind that many home care services are GST exempt. Click through for more on GST exemption.
What are tax deductions?
Tax deductions are certain expenses you have incurred in order to earn your income. Deductions will reduce your taxable income before your tax is calculated.
Tax deductions include:
– Work related expenses
– Self education expenses
– Charitable donations
– The cost of managing your tax affairs (e.g. paying your accountant)
It is important to keep track of your business expenses throughout the year. If you aren’t sure whether something is a valid expense, call the ATO or ask your accountant.
Don’t forget about superannuation!
If you are a self-employed care worker, you will need to also think about your superannuation. If you don’t put money towards your superannuation, you could risk not having enough money when you retire. Currently, the super you should be saving is calculated by taking 9.5% of your ordinary time earnings. Make sure you make regular calculations, and set this money aside in a savings account or superannuation fund.
Most self-employed people can claim a full deduction for contributions they make to their super until they turn 75. You may also be eligible for the super co-contribution payment, which is designed to help low-to-middle income earners save for their retirement. If you’re eligible, and you make personal super contributions, the government will match your contribution up to certain limits, unless you have claimed your contribution as a tax deduction.
To work out what super you must pay, you will need to work out what your income is per quarter.
For example, during the first quarter of the financial year (1 July – 30 September 2016) Sally’s ordinary time earnings were $8,000, so the super contribution Sally had to pay per quarter was: $8,000 x 9.50% = $760
For more information, visit the ATO website.
Note: The above information should not be considered legal, accounting or tax advice. We recommend you speak with an accountant, tax adviser or your financial adviser and we expressly disclaim any responsibility for any action taken or not taken based on this information.
Insurances: don’t get caught out!
Care workers provide vital and life changing services that also carry with them a huge amount of responsibility. It is important to be aware that you may be liable for any injuries, mistakes or errors that occur in the care of your client. This can involve anything from giving incorrect advice, to your client injuring themselves whilst in your care.
If you are an independent care worker, you require professional indemnity and public liability insurance to protect yourself should anything happen to your client whilst you are providing care to them.
The nature of the job
Most care workers perform a variety of tasks on a daily basis, often having to work quickly and under high pressure. In a day, you may find yourself doing anything from bathing and dressing your client, to offering reminders for prescribed and non-prescribed medicines or doing grocery shopping. The simple nature of this work includes many risks; from your own personal injury, to errors, accidental loss, alleged abuse claims and other liability issues.
Relax! Better Caring has you covered
Better Caring has worked with Zurich Australian Insurance Limited and Gow-Gates Insurance Brokers Pty Ltd to establish a suite of covers that are made available to all its affiliated care workers when providing services arranged and invoiced through the Better Caring platform.
These covers include Public Liability, Professional Indemnity and Group Personal Accident. Subject to the terms and conditions of the policies, the covers provide you with the additional peace of mind if you face costs and damages awarded against you as a result of a claim arising from the provision of approved nursing care, personal care, and domestic and social care services to Care Recipients.
Group Personal Accident cover is designed to protect you for certain accidental injuries you may suffer personally whilst engaged in work, while Public Liability Insurance is designed to provide cover for damage to property or personal injury to others while you are working.
Why Professional Indemnity Insurance?
Professional Indemnity Insurance will protect you if you are sued for an act, error or omission in relation to the provision of your professional services (as a care worker). It is not uncommon for a care worker to be held liable for a mistake even when there is no negligence involved.
Legal issues relating to Professional Indemnity can be complicated and may result in you as a professional care worker incurring substantial legal costs in order to protect both your livelihood and professional reputation.
By ensuring that you have purchased Professional Indemnity Insurance you will be guaranteed cover for damages awarded against you, including costs or expenses incurred in defending the claim.
Important Note! The cover only applies for work that is arranged and invoiced through the Better Caring platform. You will not be covered for work arranged or invoiced outside the Better Caring platform. You must ensure that you send an offer, and it has been accepted, before any work commences, or you will not be covered by insurance.