At present, I'm still an I.T. Contractor, so I can only speak from an I.T. perspective, but some of this should be relevant to anyone wanting to be a Contractor Pilot.
To contract, you should have a limited liability company. These are not absolutely necessary, but a lot of I.T. clients wont employ you without one. These cost around $1000.00 to set up.
As a contractor, I pay my own Super, and pay my own Workcare. Contractors don't get sick pay, annual leave, and don't get paid lunch, christmas parties, public holidays etc. (I'm aware that these are moot issues for a lot of pilots anyway).
To compensate for this, my charge out rate worked out that I would get paid about 2/3 more than a permanent employee. That is, if a permanent had an annual salary of $70,000.00 my charge out rate would have me earning around $110,000.00 for about the same hours per year.
[This (for the employer) was in the long term much cheaper than a permanent employee, as the TEC (Total Employment Cost) for a $70,000.00 employee is variously calculated anywhere between $120,000.00 and $150,000.00.]
What all this means is that, if you want to be a Contractor Pilot, your hourly rate should be around 50% more than what a permanent or "Casual" would earn. This is to compensate you for having to pay Super, Workcare, etc.
I wouldn't be a Contractor Pilot without a VERY CLEAR demarcation on Workcover written into the contract. It must be CLEARLY WRITTEN whether you're provided cover by the employer or have to provide your own. I arrived at my "50% more" hourly rate based on what I pay workcover as an I.T. contractor. This figure would probably have to be revised as I'd be guessing that premiums for pilots would be higher than for office workers.
Lastly, the point that Zepthiir made is more to do with how you berak up your company earnings come tax time.
CLERP VI (I think it was called) was an ATO ruling based on the 80:20 rule. If you worked more than 80% of you time at one client, you were "deemed" an employee. What this means is that you cannot pay yourself a nominal figure for the year and have the Company earn the rest (Company tax is only 36%). You have to pay tax as if the company earnings were your own.
To summarise (IMHO):
Unless you've got:
1. Your own company (with ABN)
2. Your own workcover
3. Your own super
4. An hourly rate that covers the above AND pays you a healthy margin over the award
DON'T WORK AS A CONTRACTOR PILOT.
My 2c, and hope it helps.
DIVOSH!
P.S. And this is WITHOUT going through all the hassle of Quarterly BAS statements, accountants fees (unless you can do that, too) and about 1000 ATO junk mails per year
