Before you hire a worker you need to check if they will be an employee or contractor.  Just because they call themselves a contractor, have an ABN and submit an invoice for their work does not make them contractors in the eyes of the ATO.

A worker could be an employee even though you only use them for:

• casual, temporary, on call and infrequent work
• busy periods
• short jobs, specific tasks and projects.

If you wrongly treat your employees as contractors it will affect your tax, super and other obligations as well as put your business at risk of penalties.

The ATO has a Employee/Contractor decision tool to work out if your worker is an employee or contractor for tax and super purposes. The tool does not consider other obligations – for example, payroll tax or Work Cover obligations.

If you’re still unsure about your circumstances you should seek independent advice or request a private ruling from the ATO.

For record keeping purposes please keep a copy of the result provided by the tool.