Micro enterprises and SMEs under the spotlight in the ATO's Compliance Program 2012/2013

The ATO's recently released Compliance Program 2012-2013 provides an overview of the issues the ATO will be focusing on for micro to medium sized employers over the next year.

A key focus area is sham contracting arrangements. This issue is particularly topical given a number of recent decisions involving the vexed issue of whether independent contractors are genuinely contracting on their own behalf or whether they are employees at common law.

In Working Paper Issue 9, we provided an update on ACE Insurance Ltd v Trifunovski [2011] FCA 1204 where the Federal Court ruled that five former insurance sales representatives were employees, not independent contractors. The Federal Court has subsequently ordered penalties and approximately $500,000 in damages against Ace Insurance, including an award of $333,130 for annual and long service leave entitlements for the highest paid agent who had been with the company for seven years.