The Tax Office says that it has encountered several myths adopted by both workers and employers when it comes to trying to decide the tax status of a job appointment.

1. Having an Australian Business Number (ABN) – Myth: If a worker has an ABN they are a contractor
2. Common industry practice – Myth:“Everybody in my industry takes on workers as contractors, so my business should too”.
3. Short-term workers – Myth: Employees cannot be used for short jobs or to get extra work done during busy periods.
4. The 80% rule – Myth: A worker cannot work more than 80% of their time for one business if they want to be considered a contractor.
5. Past use of contractors – Myth:“My business has always used contractors, so we do not need to check whether new workers are employees or contractors.”
6. Registered business Name – Myth: If a worker has a registered business name, they are a contractor.
7. Contracting on different jobs – Myth: If a worker is a contractor for one job, they will be a contractor for all jobs.
8. Pay super – Myth: “My business should only take on contractors so we do not have to worry about super.”
9. Specialist kills or qualifications – Myth: Workers used for their specialist skills or qualifications should be engaged as contractors.
10. Workers wants to be a contractor – Myth:“My workers wants to be a contractor, so my business should take them on as a contractor.”
11. Using Invoices – Myth: “If a worker submits an invoice for their work, they are a contractor.”
12. Contracts – Myth: “If a worker’s contract has a section that says they are a contractor, then legally they are a contractor.”

ATO Employee / Contractor Decision Tool

Use the employee / contractor decision tool to find out whether your workers is an employee or contractor for tax and super!