Common Myths About Contractors
If you are a contract worker or deal with contractors on a regular basis there are some common myths that you need to be aware of. Don’t get caught out by assuming something now, that may cost you in the long run. Make sure you check with your tax agent first. These common myths may enlighten you and help you decide whether you are a contractor or an employee.
Myth #1 –
An ABN means I am a contractor.
Just because a job advertisement requires an ABN, it does not necessarily mean that you will be a contractor in the role. Even when you have an ABN, you may considered an employee and may not be a contractor at all.
The work is only for 1 day, so I must be a contractor.
Casual, temporary or part-time infrequent work is common, but does not determine contractor status.
I want to be a contractor, so I am.
The fact that you’d like to be a contractor has no baring on the legal status. You cannot decide if you are an employee or contractor, that is determined by the nature of the work and the arrangement made with the company,
The business wants me to be a contractor.
Again, this has nothing to do with the status of a contractor. The business may not fully understand the difference and can easily get the arrangement wrong.
You have a contract, so you must be a contractor.
When you are an employee, signing a contract specifying you as a contractor makes no difference to the working relationship, or for tax or super purposes.
If you have a disagreement about your status and feel like you should be treated as an employee rather than a contractor, you can talk to the business leaders, seek legal advice or get anonymous help from the Fair Work Ombudsman. Their website is helpful and can answer some of your other employer related questions as well. LINK.
This information should be helpful and have made things clearer when it comes to your contractor vs. employee status. Hillyer Riches, your professional tax agents in Caulfield, are here to help you with any of your small business or individual tax needs.
Hillyer Riches Management Pty Ltd is a Corporate Authorised Representative (No 466483) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. AFSL / ACL No. 223135.This document contains general advice only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.
Information sourced from the ATO website.
Check out this post about Corona Virus ATO Updates in Australia.