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ARTICLE · 17 APRIL 2014

Employees v contractors - keeping the ATO auditors happy

Cooper Grace Ward
Cooper Grace Ward
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If the ATO decides that individuals are employees, the client will be exposed to shortfalls of superannuation and PAYG.

AustraliaTax
Fletch Heinemann
Fletch Heinemann
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The ATO is increasing its audit focus on businesses that use contractors. The risk is that if the ATO concludes that individuals are employees rather than contractors, the client will be exposed to shortfalls of superannuation and PAYG. There is also the additional risk of interest and penalties.

Where the ATO has raised assessments, we have seen substantial amounts involved. This is often because the issue is systemic in the business and the assessments are made across multiple income years.

In some cases, the ATO identifies the audit target due to the industry: e.g. building and construction, cleaning, fishing. In other cases, the ATO has been tipped off by disgruntled employees.

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