Contractor vs employee

The implications of misclassifying a worker

If a business misclassifies an employee, it impacts on superannuation guarantee (SG), PAYG withholding, workers compensation, and payroll tax. 

contractorsThese entitlements will often need to be met even if the misclassification was a genuine mistake.

For SG obligations, there is no real time limit on the recovery of outstanding obligations. However, the ATO will generally only go back 5 years unless the individual employee can prove an entitlement beyond this point. 

Remember that employers that fail to make their superannuation guarantee payments on time don't just pay the outstanding superannuation but are subject to the SG charge (SGC) and lodge a Superannuation Guarantee Statement. 

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Contractor or employee?

Contractor or employee? 

Defining workers in the gig economy

foodA former Foodora Australia delivery rider, Joshua Klooger, recently won an unfair dismissal claim despite a service agreement that classified him as an independent contractor. We explore the implications of the case.

Pivotal to the Fair Work Commission's decision was the classification by Foodora of Mr Klooger as an independent contractor. The "Corporate Rider" was employed under a service agreement titled "Independent contractor agreement". At the initial rate of $14 per hour and $5 per delivery, corporate riders would log into an app (the shifts app) which, at predetermined times each week, displayed available shifts. The shifts identified start and finish times and a specific geographical location where the delivery work would be undertaken. The riders could then decide what shifts they wanted. Read more…

Engaging contractors

What to do if you engage contractors

If you engage contractors, it is essential to get the facts of the relationship right. 

contractorBusiness owners need to take a proactive approach to reviewing arrangements to ensure that the business is not exposed to material liabilities. 

Key factors include:
  • Whether the work involves a particular profession or skill set.
  • The level of control the contractor has over how the contract is executed.
  • The ability of the contractor to delegate work to another person.
  • Whether the contractor supplies his own tools or equipment.
  • Whether the contractor has his own place of business.
  • The contractor's ability to generate goodwill or saleable assets during the course of the contract.
  • Read more…

Tax on shares

ATO extends data matching program

The Australian Tax Office (ATO) is utilising data provided by the Australian Investments and Security Commission (ASIC) to data match share trades.

taxThe ATO is accessing more than 500 million records detailing price, quantity and time of individual trades dating back to 2014. The information complements information that the ATO already holds from brokers, share registries and exchanges.

Utilising this wealth of information, the ATO will explore what has been reported on tax returns, specifically, capital gains on the sale or transfer of shares and the losses claimed.

Given that more than 5 million Australians now own shares, the ATO is keen to ensure that errors are minimised.

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Tax deductions denied

No tax deductions if you don't meet your tax obligations

New laws passed by parliament last month directly target the behaviour of taxpayers that don't meet their obligations.

excavatorTax deductions denied
If taxpayers do not meet their PAYG withholding tax obligations, from 1 July 2019 they will not be able to claim a tax deduction for payments:

  • of salary, wages, commissions, bonuses or allowances to an employee;
  • of directors' fees;
  • to a religious practitioner;
  • under a labour hire arrangement; or
  • made for services where the supplier does not provide their ABN. 

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