The
Australian Tax Office defines:
Employee
An employment relationship exists if some or all of the following factors are present:
- the payer controls the way in which the worker performs his/her duties
- the worker performs the duties of their position and cannot delegate or contract out their work
- the worker is recognised as a part of the payer's organisation
- the worker is not responsible for providing the materials or equipment required to do the job
- the worker is paid for the time worked, rather than on the completion of a specific task
- the worker takes no commercial risks and cannot make a profit or loss from the work performed
- the worker receives paid leave (for example, sick, annual or recreation, or long service leave), or
- work hours are set by an agreement or award.
None of these factors alone is indicative of an employment relationship. The totality of the relationship between the parties and a consideration of all the factors is required.
If a worker is an employee, you must withhold an amount from any salary, wages, commissions, bonuses or allowances you pay to the employee and send the amounts withheld to the Tax Office. An employer may also have obligations under fringe benefits tax and the superannuation guarantee laws.
Independent contractor
An independent contractor agrees to achieve a specified result for an agreed price. In most cases an independent contractor:- is paid for results achieved
- provides all or most of the necessary materials and equipment to complete the work
- is free to subcontract the work to other entities
- has freedom in the way the work is done subject to the specific terms of the contract
- bears the commercial risk and responsibility for any poor workmanship or injury sustained in the performance of work
- provides services to the general public and other businesses as well as the payer.
- is free to accept or refuse work, and
- is in a position to make a profit or loss.
If a worker is an independent contractor, you (the employer) are required to withhold an amount from payments to them only where the contractor:
- has entered into a voluntary agreement
- provides their work or services for a client of yours under a labour hire arrangement, or
- has not quoted their ABN to you.
Superannuation guarantee laws may apply to payments for work or services by an independent contractor in some cases.
If, for example, as a commercial pilot you conduct a flight in an AOC holder's aircraft, under the auspices of an operator/employer's AOC, in accordance with the operator's Operations Manual, in a manner, time and as prescribed by the operator, how can you possibly be anything other than an employee???
capt_akun,
you are not a sub contractor - you are an employee!!
As an employee, you
must be engaged and remunerated under the terms and conditions of an Award, a
registered AWA/ITEA or a
registered EBA. Your employer must deduct PAYG taxation and pay the Superannuation Guarantee Levy of 9%.
But don't take my word for it - call the ATO
13 28 66 and get it from the horse's mouth!
Your purported "sub contract" arrangement with your employer is illegal and leaves your employer - and yourself to a degree - exposed to action by the Australian Tax Office.
Unbelievable! When will people learn???????
