The Danger of Misclassifying Contractors

Many business owners assume that if they hire independent contractors, they will not be responsible for PAYG withholding, superannuation guarantee, payroll tax and workers compensation obligations. However, each set of rules operates slightly differently and, in some cases, genuine contractors can be treated as if they were employees. There are significant penalties faced by employers that get it wrong. 
A genuine independent contractor who is providing personal services will typically be:

·       Autonomous rather than subservient in their decision-making;

·       Financially self-reliant rather than economically dependent on your business; and

·       Chasing profit (that is, a return on risk) rather than simply accepting a payment for the time, skill and effort provided.

Please feel free to contact our office if you would like to discuss this further.