There has been a recent increase in the level of Australian Taxation Office (ATO) audits and reviews of employee versus contractor relationships.

Deeming the relationship as an employee or contractor arrangement can have a significant impact on your tax and withholding obligations, particularly in relation to PAYG Withholding, Superannuation Guarantee Contributions (SGC) and ABN Withholding. As such, it is extremely important to clarify these working relationships.

If this impacts you, it is recommended you take a close look at your existing relationships to establish for tax purposes whether an employee or contractor relationship exists.

Below is an outline put together by the ATO on the differences between an employee and an independent contractor.

Generally, a worker is an employee if they:

An independent contractor is an entity (such as an individual, partnership, trust or company) that agrees to produce a designated result for an agreed price. In most cases an independent contractor:

If you need assistance in clarifying whether your worker is an employee or contractor, click here for access to the ATO Employee/contractor decision tool or call us on 07 3833 3999.