Just because an agreement states that a worker is an independent contractor, this does not mean that they are a contractor for tax and
superannuation purposes, new guidance from the ATO warns.
Where there is a written contract, the rights and obligations of the contract need to support that an independent
contracting relationship exists. The fact that a contractor has an ABN does not necessarily mean that they have genuinely been engaged as a
contractor. The ATO says that “at its core, the distinction between an employee and an independent contractor is that:
Contracts over time
The ATO points out that a contracting agreement at the start of a relationship may not continue to be one over time. For example, if the project the contractor was engaged to complete has finished, but the worker continues working for the company then the classification needs to be revisited.
What happens if there is no contract?
If no contract exists, then it’s important to look at the form and substance of the relationship to come to a reasonable position about
whether an employment or contractor relationship exists.
Unsure on your obligations as an employer? Get in touch with our business advisor's to assist in your business' success.
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The Taxable Payments Annual Report (TPAR) is a mandatory report for Australian businesses in certain industries to disclose contractor payments to the ATO by August 28 each year, ensuring accurate tax reporting.