We are often asked by many business owners about how the ATO decides the difference between Employees and Contractors with regards to Superannuation Liabilities.
The issue arises because a business owner may classify a worker as a contractor and think they don’t have to pay any super for the worker (9.5%), but for superannuation purposes they may be classified as an employee and therefore be entitled to employee super. This also impacts Tax withholding.
I don’t often say this, but the ATO has built an Employee/Contractor decision tool that is actually quite simple and easy to use. http://bit.ly/ContractorEmployeeTool
If you are considering changing any workers to contractors or currently have contractors you are not sure about, this tool is well worth using. Any questions please call our office.