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ATO tackles ‘ employee or contractor’ question

The Tax Commissioner has announced the release of the ATO’s new ‘ Employee or Contractor’ homepage, which has been developed to help address areas of confusion and “highlight common reasons businesses get the employee or contractor decision wrong.”

The Employee or Contractor homepage has all the information businesses need in one place to help them determine if their workers are employees or contractors, including:

  • The basics – things every business needs to know;
  • Common reasons businesses get the decision wrong;
  • Industry specific information;
  • An Employee/contractor decision tool which will guide businesses in making their decisions; and
  • A summary of the obligations businesses need to meet for their employee or contractor.


The ATO has also released the following guides on employees and contractors including:

  • Apprentices and trainees are employees, not contractors;
  • Building and construction industry – how to determine if workers are employees or contractors;
  • Common myths about the employee/contractor decision;
  • How to determine if workers are employees or contractors;
  • How to report a business incorrectly treating employees as contractors; and
  • When a worker asks to be contractor.

Ref: ATO Media release 2012/32

48% get “contractor” wrong

In a recent speech to the Council of Small Business of Australia (COSBOA), the Tax Commissioner stated that the ATO conducted approximately 1,100 audits on businesses where it suspected that the business may have incorrectly treated employees as contractors.

From its audits, the ATO collected details of approximately 51,000 payments made to around 41,000 contractors, about 18,000 of which were individuals.

It found that 48% of businesses that engaged contractors were wrongly treating individuals as contractors.

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