Besides the sham contracting penalties imposed by the Fair Work Ombudsman – which are $51,000 per contravention (at the time of writing) – you could also be exposed to other contractor obligations, such as:
- The ATO has powers to look back into unpaid PAYG for 4 years
- The ATO has powers to look back into unpaid Superannuation right back to 1992
- The ATO has powers to look back into unpaid Fringe Benefits Tax for 3 years
- The Office of State Revenue has powers to look back 5 years
So roughly speaking, for a workforce of 10 contractors who you wrongly classified as contractors when they were really employees – earning on average $100k p.a. for the last 5 years – your exposure could cost you:
- PAYG $3.85 million (using highest marginal tax bracket)
- Super $475K (conservatively + interest + penalties)
- Payroll Tax $250K (conservatively + interest + penalties)
As you can see, the consequences of misclassifying your workers are huge. You owe it to yourself and to your workers to be 100% Certain that they are indeed compliantly engaged as independent contractors and will not be deemed employees under closer inspection.
Taking the necessary steps to review your compliance with Fair Work obligations is crucial in setting yourself and your enterprise up for success.
Certica® has provided compliant independent contracting solutions to Australian companies for over 16 years and we pride ourselves on finding solutions for our clients who want the freedom that compliant and fair contracting arrangements provide. If you engage contractors and you have a concern about managing your workforce, please contact us immediately for a no-obligation risk assessment and practical tips to ensure you’re always a step ahead.