As an employer, it's important you understand the difference between employees and contractors. You're responsible for getting it right!

2016_MAR_AUS_TAX - Employee or contractor – do you know the difference?

Common myths

Do you think that someone is a contractor because they:

  • have an ABN
  • do short-term work only
  • have agreed to work as a contractor
  • issue invoices for their work, or
  • work in an industry where just about everyone is a contractor?

In fact, none of these things by themselves determine whether someone is a contractor or not.

For example, employees can also do short-term work, whether it's just to help out with busy periods or to work on a specific project.

And having an ABN doesn't automatically make someone a contractor. Every situation is different, so you need to take into account a range of factors.

Why you need to know

Employees and contractors have different rights and entitlements when it comes to things like leave, super, tax and hours of work. Getting it wrong could land you in trouble, and put your business at risk of penalties.

Help is at hand

Working out your tax and super responsibilities as an employer can be tricky.

To help you employ people the right way, use the Australian Tax Office's Employee/contractor decision tool .

The tool will tell you:

  • if your worker is an employer or contractor
  • your tax and super responsibilities for them.