The Tax Office's ongoing compliance efforts have some
constant focus.
One of these is the often flawed characterisation of an employee
as a contractor by businesses.
The mischief from the Tax Office's point of view is the
avoidance of employer obligations relating to the Superannuation
Guarantee (SG) and Pay As You Go (PAYG) withholding.
Characterisation is fraught with elements of complexity. This is
because of the differing definitions for tax and for superannuation
purposes and the consequences which may follow if an incorrect
classification is made.
For instance, entitlement to annual leave, sick leave and other
benefits may arise. An employer's liability to work cover and
payroll tax in various states are also driven by this
characterisation.
