You are a Tax Director in the following situations: a) A client of the firm has enquired about how to treat the income of Oliver Martin and Erica Ferguson who both provide services to AGL Limited. The client indicates that she is unsure of the type of employment and how to account for the income tax for each person. The client provided Tamika with the following information: Oliver Martin Oliver Martin provides accounting services for the company. He uses his own computer. He works from the company’s premises Monday to Wednesday only. He is paid at the end of each month. To obtain his payment he must provide the company with an invoice detailing the days worked. He is paid a daily rate of $30,000 for 8 hours of work. He determines his own time of work. Tasks are assigned to Oliver by the Head of Reporting & Finance. He reports directly to the Head of Reporting & Finance. Oliver is not entitled to vacation leave, sick leave, and he does not a participate in the company’s pension plan. There is no restriction on Oliver’s ability to provide services to other persons. Erica Ferguson Erica is an on-call machine technician. She repairs the company’s machines in the factory. She uses her own tools. For each machine serviced a flat fee is paid monthly. Erica is also paid separately for repairs. Each month she provides a report to the Operation Manager for the work done as well as her invoice for payment. One term in Erica’s contract indicates that she is expected to dedicate all her time to AGL Limited. She is provided with a lunch card which she uses to obtain lunch at the company’s canteen. She also obtains medical and pension benefits. Required (i) Provide guidance to Tamika on the factors she should consider in determining the type of employment.
You are a Tax Director in the following situations:
a) A client of the firm has enquired about how to treat the income of Oliver Martin and
Erica Ferguson who both provide services to AGL Limited. The client indicates that
she is unsure of the type of employment and how to account for the income tax for
each person. The client provided Tamika with the following information:
Oliver Martin
Oliver Martin provides accounting services for the company. He uses his own computer.
He works from the company’s premises Monday to Wednesday only. He is paid at the
end of each month. To obtain his payment he must provide the company with an invoice
detailing the days worked. He is paid a daily rate of $30,000 for 8 hours of work. He
determines his own time of work. Tasks are assigned to Oliver by the Head of Reporting
& Finance. He reports directly to the Head of Reporting & Finance. Oliver is not entitled
to vacation leave, sick leave, and he does not a participate in the company’s pension
plan. There is no restriction on Oliver’s ability to provide services to other persons.
Erica Ferguson
Erica is an on-call machine technician. She repairs the company’s machines in the
factory. She uses her own tools. For each machine serviced a flat fee is paid monthly.
Erica is also paid separately for repairs. Each month she provides a report to the
Operation Manager for the work done as well as her invoice for payment. One term in
Erica’s contract indicates that she is expected to dedicate all her time to AGL Limited.
She is provided with a lunch card which she uses to obtain lunch at the company’s
canteen. She also obtains medical and pension benefits.
Required
(i) Provide guidance to Tamika on the factors she should consider in determining the
type of employment.
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