With 23% of Australian employers now regularly engaging temporary personnel, it’s apparent that contract work is on the rise.

According to the Bureau of Statistics, there is currently an estimate of one million independent contractors working in Australia.

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What’s with contracting?

For businesses that prefer greater flexibility, contract employment sure makes up for a great solution. Why?
Because generally speaking, they can just hire contract talents instead of permanent ones to make things easy, there’ll be no need to worry about the association infrastructure and taxation overheads required for permanent employees. For this reason, Australian employers of contractual employees won’t have to think about PAYG tax, fringe benefits tax (FBT), or super guarantees, among others.

Someone’s watching

According to the Fair Work Ombudsman (FWO), misclassification of employees as contractors has become a continuing issue within several industries in Australia. With this in mind, they, along with the Australian Taxation Office (ATO) has started monitoring independent contractors.

Up to $63,000 await those who clearly breach provisions from the Fair Work Act 2009, furthermore, one shouldn’t also forget the legal responsibilities the business may be held liable in the event that a contractor is found to be underpaying staff.


According to the ATO, several businesses may have to deal with the following by all means if example employer obligations aren’t met straightaway:

  • A withholding penalty for not meeting PAYG withholding obligations
  • Super guarantee charges for not meeting super obligations, comprising: super guarantee shortfall amounts; interest; administration fee; and penalties up to 200 percent in the most egregious cases.

Where does the difference lie?

Learning the distinction between employees and independent contractors is a challenge that employers and workers encounter. The definitions aren’t exactly clear, but helpful information is now available on the ATO and FWO’s website to explain things in a brief. Tools have also been provided to assist employers in determining whether a worker is an employer or a contractor. Above all, you can reach the Fair Work Infoline at 13 13 94.

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