It is important to determine whether a new worker is classified as an employee or a contractor, as it affects tax, superannuation, and other obligations such as workers compensation insurance, as well as the worker’s entitlements.
Accurately determining the classification of a worker is essential to creating a fair environment for all Australian businesses.
To assist small businesses in making this decision, the Australian Taxation Office (ATO) is creating a Practical Compliance Guideline PCG 2022/D5 called Classifying Workers as Employees or Independent Contractors – ATO Compliance Approach and a Draft Taxation Ruling TR 2022/D3 Income Tax: Pay as You Go Withholding – Who is an Employee. You can find out more and provide your feedback via the ATO website.
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