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Contractor Compliance Must Be Considered in Totality

The last two weeks have seen some large Australian and international companies named and shamed (accuracy of information is questionable) in a few landmark contractor misclassification inquiries.  All mainstream commentary to date has focused on what we call the “Above the Line” engagement practices, centring around the many interpretations of the Fair Work Act (2009).

Whilst these issues, namely indicia of contracting, sham contracting, and agreement terms vs. operational application, are all critically important in determining the true nature of a relationship, it really is just the tip of the iceberg.   It is absolutely imperative that we spend time addressing the “Below the Line” Deeming Laws that govern responsible contracting.

Below the line areas of concern include:

  • Individual remittance of workers’ Personal Income Tax;
  • Provisions for individual Superannuation;
  • Workers’ compensation for Deemed workers;
  • Remittance of Payroll Tax for Deemed workers;
  • Adequate individual insurance coverage; and
  • Building licenses, blue cards, etc.

To only consider the “Above the Line” issues, we are neglecting to address the unfairness created by abusers of “Below the Line” compliance, the effect of which impacts all of us.

Workers, whether contractors or employees, should equally contribute to their responsibilities for taxation, superannuation, etc., (we all use hospitals, schools, roads and transport), and ensuring that they are adequately insured to cover the risks they might incur for themselves or others.

Ignoring these issues is tantamount to endorsing contracting as an avoidance scheme.

Whether you are a critic of contracting or a champion of self-employment, we should all agree that both parties (Engager and Worker) need to contribute their Statutory obligations to society.  By ignoring these concerns, we are sponsoring an unfair playing ground, where the good guys are penalised financially for being compliant and the dodgy-brothers reign supreme.

So, while proponents for the “Above the Line” arguments discuss the minutiae of detail over control, delegation and other contracting indicia, can we all take a moment to review these arrangements in totality?

We believe that contracting is a right of choice available to business and individuals alike, however compliant contracting means being responsible and meeting all of your Statutory obligations.

Aristotle said it best: “The whole is more than the sum of its parts.”

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3 responses to “Contractor Compliance Must Be Considered in Totality”

  1. Ksik says:

    How much would a foreign worker on a working holiday visa be taxed? I have a TFN and a superannuation. Thanks !

  2. Andrey says:

    Candidates will be considered in totality of their skills and experience versus strict interpretation of “must haves”.

  3. says:

    For example, a worker’s control of his or her own work hours is not necessarily indicative of independent contractor status; instead, the worker must control meaningful aspects of the working relationship.

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