There are so many myths about when is a contractor really an employee? Not understanding the differences could leave you in a lot of trouble with the ATO. Here’s a short video explaining more.
There are a number of key determinants as to whether an employee is a contractor. Some include:
- Employees generally work under the direction and control of their employer, while independent contractors exercise more personal control.
- Employees carry no financial risk, while contractors bear the risk of making a profit or a loss from the job.
- Employers are paid superannuation and leave; contractors generally aren’t.
- Employees get tax deducted by their employers but independent contractors pay their own PAYG and GST.
Like so many aspects of employment law, contracting is something you need to know more about than the people who work for you. Although it might appear to be a tax-effective decision today could result in disaster for your business in the future.
Speak with us today of you have any concerns and we’ll go through your circumstances to give you peace of mind.