Try this Quick Quiz…

Are you a Business Owner, with workers?

Have you Classified them Correctly?

If NOT it could cost you $$$ in fines and penalties from the ATO and OSR.
Following is a Step by Step question guide to see if you have classified your workers correctly.

Step By Step Guide: Employee

Employee: Need to deduct PAYG and pay Super on top.

  • Delegation – Can you delegate the work to another person?
    Can NOT Delegate
  • Basis of Payment – Is the worker paid on time spent or results achieved?
    Paid on Hours worked, Even if they give you a Tax Invoice – they may still be Employees!
  • Equipment/ Tools – Do they provide their own Tools?
    Business provides the Tools or an Allowance for tools
  • Risk – Who wears the Commercial Risk?
    Doesn’t wear any risk. Any errors or rectifications are paid by the Business/Employer
  • Control over work – Does the worker have control over how the work is done?
    Employees have no control over the way the work is done. It is all as per the direction of the Boss.
  • Independence – Are they part of the business or Independent?
    Worker does not operate independently of the business. They are considered part of the business.

 

Step By Step Guide: Contractor

Contractor: Paid on basis of Tax invoice and GST is charged.

  • Delegation – Can you delegate the work to another person?
    Can Delegate
  • Basis of Payment – Is the worker paid on time spent or results achieved?
    Paid on Results
  • Equipment/ Tools – Do they provide their own Tools?
    Provides all the tools needed to get a job done.
  • Risk – Who wears the Commercial Risk?
    Any errors or rectifications are to be met by the Contractor, not the Business Owner.
  • Control over work – Does the worker have control over how the work is done?
    Contractors have full control over how the work is to be performed
  • Independence – Are they part of the business or Independent?
    Worker is free to accept or reject additional work

 

Not one answer determines the result, you need to look at this as a WHOLE.
If anything here makes you wonder if you are on the right track, go see your Accountant to make sure you’re doing the right thing.

Coralie

Accounts Manager
Bachelor of Business – Accounting (Sub. Major Business Law), Diploma of Financial Services, TAE, J.P.