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Contractor Tax & Super – the big $$ risk

I know that I tend to harp on and on about contractor tax and super compliance, but as you can see from the recent ATO stance on Foodora, the risk is real and it’s important that your business is protected.

Take a look at this recent article, which highlights one of the many issues with the Foodora contractor model – here

Several Regulators have what are called “Deeming Laws” to address how that specific regulation will treat workers, regardless of whether the nature of the relationship is employment or contracting.

Typically, Deeming Laws mean that even your contracted workforce may be “deemed” as employees for the purpose of that regulation.

Such as:
  • 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.

  • So what happens if I don’t meet Deeming Laws?
    Besides the sham contracting penalties imposed by the Fair Work Ombudsman – which are $54,000 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.


    If you have any questions about your compliance, please contact us on ready@certica.com.au or 1300 301 401 about the best way forward.

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