employed or self-employed?

Increasingly, employers are using a mix of employees and independent contractors. Wether tax and superannuation obligations apply depends on the employment status which, in turn, is governed by factors such as control over work, level of independence, payment method and commercial risk.

If in doubt, the employee or contractor decision tool on the ATO website enables employers to answer a series of questions to determine whether a particular hire should be treated as an employee or contractor for tax and superannuation purposes. 

An employer is responsible for paying the tax and superannuation contributions for an employee. When hiring a contractor, the responsibility to pay tax and superannuation payments for work done lies with the contractor. 

rules for the construction industry

Employers in the building and construction industry are required to report the total payments made to each contractor for building and construction services. This is to improve compliance with tax obligations by contractors. Contractor payments should be reported via the taxable payments annual report, and records are cross-referenced to detect contractors who have either not lodged tax returns or not declared their full income.

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