Article written by Bob Green, Business Advisor, Western Sydney Business Centre.
There are many myths which persist in the world of small business including if someone has an ABN you can use them as a subcontractor.
Years ago when the Hawke/Keating government introduced the Superannuation Guarantee scheme businesses seized on the fact that they could save money by retrenching their workers and offering them employment as subcontractors and not have to pay all of the on costs related to wages.
Since then, this myth has been tried many times in law courts and the myth was knocked on the head with a potentially very expensive outcome. If a business is caught wrongfully using contractors it is possible that, on top of the contributions and payments the business should have made, they will also pay heavy fines and interest charges.
So, how do you know if the person you are employing is a true subbie or an employee? The answer to that is – it depends. And if he is a true subbie, WorkCover rules could classify him as a “deemed worker”.
But you are not left drifting in an ocean of indecision! The Taxation Office has a very useful page at https://www.ato.gov.au/business/employee-or-contractor which allows you, through a number of questions, to find out if you are hiring a true subbie or if they are an employee. Once you have been through the test, if the site says subbie, take a screen shot and put it in the subbies file. Do the test regularly to make sure you are ahead of the game.
Also do the test on to make sure you have the workers compensation aspect covered as well at http://workerstatus.workcover.nsw.gov.au.
For help with your this or any aspect of your business including NDIS, call Bob Green at Western Sydney Business Centre or on 0490 251 615 or email bob@wsbusiness.com.au.