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Contractors vs Employees:  Under the Spotlight

Why Consider the Contractor issue now?

The contractor issue is not at all new, nor has it been subject to any dramatic recent change.  However there are a number of diverse factors that have brought his issue back to the spotlight.

  1. Growth in the number of Contractors:  There has been an increase in contractors over recent years.
  2. Government / Treasury Attention:  Contractor reporting regimes have been introduced for several industries.
  3. Tax Office Attention:  The Tax Office's compliance plan for 2012 is reason enough to note how important the contractor issue has become.
  4. Institutional attention:  It is reasonable to expect that union scrutiny of contractor arrangements will continue.

What are your obligations?

There are very different obligations depending on whether you engage a contractor or employee in such areas as:

  • PAYG withholding
  • Payroll Tax
  • Superannuation Guarantee
  • Fringe Benefits Tax
  • Workers' Compensation and
  • The Fair Work Act
  Business taxes, calculator, pie chart, bar chart, clip board, calendar, clock, coins, percentage and checklist.

Determining your obligation requires a detailed review of the legislation and case law under each specific area.  We recommend that you contact your Brentnalls SA team member to help you determine your obligations. 

Why the complexities?

Whether an entity is an employee or a contractor is not clear cut.  An employee is rarely defined in any legislation and therefore case law is often the only guidance to define this relationship.

Determining a worker's status depends upon the terms and conditions under which the work is performed.

Facts to consider

We have provided a table below to help you determine whether you have engaged a contractor or employee. These factors may be oral or in writing, or simply understood between the parties.

Factors to Consider for Employee Vs Contractor chart Brentnalls SA

Does the worker have an ABN?

If a worker has an Australian Business Number (ABN) this does not automatically mean the worker is a contractor.  You still need to consider the nature of your agreement with the worker.

What if the contractor is a company?

A contractor that is a company is more likely to be treated as a contractor, however if a company is ultimately put in place to avoid an employment relationship, it is likely that the authorities will look through the company structure.

How can Brentnalls SA help?

If you would like to discuss this issue further please contact Brentnalls SA. Please review our Checklist which offer a series of questions designed to prompt assessment of the relationship between Principals and Contractors, and the potential of that relationship being assessed at common law as an employment relationship. Our objective is to see you and your business thrive now and into the future.

If you would like to print this information please click here for PDF format.

The information provided in this information sheet does not constitute advice. The information is of a general nature only and does not take into account your individual financial situation. It should not be used, relied upon, or treated as a substitute for specific professional advice.  We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.

Our Services

Our services go beyond compliance to find out more about your goals, your priorities and establish plans to grow and protect your future wealth. We will take the time to listen, ensuring we meet your goals, as well as guide you so you have a better understanding of the financial decisions being made. Our services include:

Accounting & Tax
Business Advisory
Wealth Creation & Preservation

Our People

Our Partners & Principals want to be part of your team that drives your future success, that provides you with solutions to your challengers. More importantly, who listens and knows exactly where you are going and what you want to achieve financially. 

"Helping you achieve your dreams, is our passion, and our strength is in our dedicated professional team."


News & Resources

Our priority is to ensure your kept up-to-date on trends, industry legislations, accounting and tax updates, business advisory information, superannuation and much, much, more. All of which, may have an impact on you and your business. Our resources provide additional supporting information in the following areas: 

Fact Sheets
News Articles
COVID-19 - Information Sheets
COVID-19 - Brentnalls SA Response

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PO Box 338
Welland SA 5007 

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P: (08) 8241 8444
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