Are you a contractor or an employee?

Описание: Sometimes we see uncertainty around whether an employer is required to pay superannuation contributions on behalf of a contractor or employee.

Today I highlight a recent tax case where the Administrative Appeals Tribunal decided that an individual engaged by a company to provide various website services over an extended period of five years, was nonetheless not an employee of the company.
In this instance, the taxpayer company engaged the individual to build and maintain it’s website. Between 2007 and 2012 the individual submitted invoices for varying amounts described as “Online Marketing and Sales”, and a monthly fee of $1,000 for “ancillary services.”

In the ATO’s view, these amounts were income earned by the individual as an employee. The ATO accordingly determined that the company had not met it’s SG obligations in respect of the individual during the relevant period and issued SG charge assessments for this period to the company.

The company then claimed that the individual was engaged as an independent contractor, not as an employee. Although there were some factors that pointed to an employer/employee relationship, there were several fundamentals not suggestive of this. In particular, the lack of control by the company as to how the agreed work was to be carried out, the limited integration of the individual into the company’s business (as highlighted by the flexibility afforded to him in relation to his times and manner of working), and his ability to employ discretion in terms of employing others, were extremely significant.

The bottom line here is that this can be somewhat of a grey area, and it’s important to have this conversation with your employer or employee before commencing your relationship.