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    Not correct. Add explanation here, with more details on reverse.

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    My Accountant has checked my Agreement and says that I'm covered. Is that good enough?

    No. Legal matters (especially Industrial Relations) are complex, often requiring a fair amount of interpretation, and only qualified lawyers should be trusted to deliver valid legal advice.

    Be Certain.

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    If a worker submits an invoice for their work, they are a contractor.

    Not true.  Submitting an invoice for work done or being 'paid on invoice' does not automatically make a worker a contractor.

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    • To correctly determine whether a worker is an employee or contractor, you need to look at the whole working arrangement and examine the specific terms and conditions under which the work is performed.

    • If, based on the working arrangement, a worker is an employee, submitting an invoice or being paid on the basis of an invoice will not make the worker a contractor.

    Contracting means I don't have any job security

    Not true, let’s look at it another way.  Job security is not provided by tough dismissal legislation, it’s earnt by being great at what you do which builds ongoing demand for your services.  

    This rule applies regardless of whether you work as an employee or a contractor.

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    How to Build Work Certainty:

    • Have a great attitude

    • Build and maintain your skills

    • Always add value

    • Be an expert and become indispensable

    By adopting this approach you will gain control over when you work and how much you are able to charge for your services.  Contracting can be liberating.

    Disclaimer: This information does not constitute advice as we are unable to consider your individual circumstances.

    Contracting is used as a loophole for tax avoidance

    Wrong.  Contractors are required to meet tax and other statutory obligations just like every other taxpayer; they simply have more control and responsibility over their taxation affairs compared to other workers.

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    • An employee has income tax deducted by their employer

    • An independent contractor pays their own tax and GST to the Australian Taxation Office

    • Independent contractors pay the same rate of income tax as other workers.

    • Taxpayers who don’t meet their tax obligations may be liable to penalties or interest charges, or both.

    • Some businesses falsely assume that certain taxes don’t apply when engaging contractors, it pays to check the legislation.

    Disclaimer: This information does not constitute advice as we are unable to consider your individual circumstances.



    A worker cannot work more than 80% of their time for one business if they want to be considered a contractor, right?

    Wrong.

    Certainty in Contracting.

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    The 80% rule, or 80/20 rule as it is sometimes called, relates to personal services income (PSI) and how a contractor:

    • Reports their income in their own tax return

    • determines if they can claim some business-like deductions.

    It is not a factor a business considers when they determine whether a worker is an employee or contractor.

    I've heard the term sham contracting. does that mean contracting is illegal?

    No.  A sham contract is when a business deliberately disguises an employment relationship as an independent contracting arrangement, instead of engaging the worker as an employee.  

    Businesses can contract, but they must do so correctly.

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    • Contracting is common practice.

    • According to the Australian Bureau of Statistic, in 2012 there we 980,000 independent contractors (individual contractors that did not employ/engage others)

    • A further 1,000,000 people were self-employed (engaged other workers)

    • In total 17.2 per cent of the Australian workforce are self-employed, which equates to 1.9 million persons.

    • The Fair Work Act protects genuine employees from ‘sham’ independent contracting arrangements


    Disclaimer: This information does not constitute advice as we are unable to consider your individual circumstances.

    By using contractors, I lose control of my business

    Not correct.  Using independent contractors could actually grant you business with greater control over its costs and its production.

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    • Contractors bear commercial risk, giving them more motivation to perform well

    • Contractors supply their own equipment and sometimes materials, hirers do not pay for equipment purchase and maintenance, theft or loss

    • Contractors are usually paid to achieve a result, this means that payments are linked to individual productivity.  This drives output.

    • Using contractors give your business the flexibility to match its workforce size and cost with demand


    Disclaimer: This information does not constitute advice as we are unable to consider your individual circumstances.

    I can make a contractor responsible for all statutory obligations (like super) if I write it into the contract I have with them, right?

    No.  If you have a legal obligation to meet any statutory costs, then simply by stating your contractor is liable does not make it so.  The law overrides any term in your agreement.

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    Businesses will sometimes include specific terms in a written contract to say that the worker is liable for certain obligations in the mistaken belief that this will transfer liability to the contractor

    A contract specifying the worker is a contractor and is liable for a statutory cost makes no difference and will not:

    • change the liability of the engager to pay workers’ compensation or payroll tax

    • change the super obligations a business is required to meet


    Disclaimer: This information does not constitute advice as we are unable to consider your individual circumstances.

    If I wear a uniform that means I must be an employee?

    Not correct.  Wearing a uniform does not automatically mean an individual is an employee, 

    To correctly determine whether a worker is an employee or contractor, you need to look at the entire working arrangement.

    Certainty in Contracting.

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    • The wearing of a uniform and who shoulders the cost of purchase and maintaining the uniform may become a small matter of consideration when considering the question of employee or contractor

    • A uniform may be issued to a contractor based on the requirements of a third party or legislation

      • Security guards - must be identifiable as such for public safety

      • Sales agents - Branded for customer reassurance

    • Other factors including direction and control have more relevance  


    Disclaimer: This information does not constitute advice as we are unable to consider your individual circumstances.

    Business only use contractors to avoid liabilities, right?

    Wrong.  Businesses derive benefits from the flexibility that contracting brings and can reward individuals for the results they produce.  

    In most instances a business will still be liable for contractor Super, Payroll tax and Workers’ Comp, as well as ensuring a fair rate is paid.

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    • In industries with fluctuating levels of work, such as construction, contracting means businesses can maintain greater flexibility.

    • Paying for a result means that productive contractors earn more than employees, however, just like employees they must still meet their tax obligations.

    • The Fair Work Ombudsman is quite active in prosecuting those who engage in unfair or sham contracting, and sets stiff penalties for those found guilty (up to $51,000 per offence) on top of having to pay employee entitlements.

    • State and federal legislation means that most contractor payments attract payroll tax and workers’ compensation as well as superannuation.

    • When using contractors, businesses do not gain an advantage by avoiding liabilities, they gain by rewarding a productive and efficient contractor workforce.


    Disclaimer: This information does not constitute advice as we are unable to consider your individual circumstances.

    Super’s only for employees, right?

    Wrong.  Payments made to contractors are often liable for Superannuation Guarantee contributions.

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    • Once the monthly income threshold (currently $450 / month) is exceeded, Superannuation Guarantee contributions (SG) must be made for ALL employees and some contractors you engage.

    • For contractors, SG liability depends on how a contractor is engaged and on what basis you pay them.

      • Sole Trader: The payer has a liability for super if a contractor paid predominantly for their labour on a time/personal services basis.

      • Pty Ltd Company: The contractor is liable for their own superannuation guarantee contributions as they are a worker of their own company.


    Disclaimer: This information does not constitute advice as we are unable to consider your individual circumstances and is subject to change at any time.

    If someone has an ABN, they’re a contractor, right?

    Wrong! An ABN is a tax identifier only, it has NO bearing in determining if someone is a contractor or not.

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    • The Australian Business Number (ABN) is a unique 11 digit identifier that makes it easier for businesses and all levels of government to interact.
    • ABN registration is not mandatory
    • Not everyone is entitled to an ABN
      • Individuals must be able to establish they are operating an enterprise
      • Contractors operating under "labour-hire" arrangements are not entitled. 
    • Some individuals provide their services as an independent contractor using their Tax File Number (TFN) 
    • Having an ABN doesn’t make an individual an independent contractor. The specific circumstances of the working relationship are important in determining whether someone is an independent contractor or an employee.

    I don't have to declare payments I make to contractors for Payroll Tax, right?

    Wrong.  Payroll Tax is imposed on all payments made for labour, regardless of whether a worker is an employee or contractor.

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    • Payroll tax is a state tax imposed on payments made to workers (liable wages)

    • “liable wages” include all payments made to employees and labour payments made to most contractors.

    • Each state has a payroll tax threshold for the gross value of Australian liable wages, payments made under this amount are exempt.

    • Once the threshold is exceeded liable wages become subject to payroll tax at the relevant state percentage.

    • Payments made to contractors under some circumstances may be exempt from payroll tax.

    • Despite some harmonisation of legislation, rates, thresholds, exemptions and rules differ from state to state.

    • It pays to do your research.

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