The difference between a contractor and an employee

June 30, 2014


The ATO is increasing its audit focus on businesses that use contractors. It is essential that employers, employees and contractors know the difference between a contractor and an employee.

It is illegal for businesses to incorrectly treat their employees as contractors. The ATO uses a combination of education and compliance action to ensure that all businesses are on a level playing field.

Employers will be exposed to shortfalls of superannuation and PAYG if the ATO concludes that they have confused the distinction between their employees and contractors. There is also the additional risk of interest and penalties.

There are a number of factors used to determine a contractor, which may not always be obvious, so it is important that business owners are aware of the difference between an employee and a contractor

Employers should also ensure that they keep relevant and good quality documentation, as this can prove whether the employer hires an employee or contractor.

Our accountants and business advisors are at hand to deal with any questions you may have about this article or any queries you may have about your business in general.
Call (02) 4926 2300 or email us.


If you need to discuss the difference between a contractor and an employee please contact Leenane Templeton today and so we can help you!

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