Am I entitled to Superannuation Guarantee contributions, and more ...

Beta version 1.0

Thank you for choosing emubook.com for your 'robo' tax advice. Our free software automatically generates advice from the question and answer information you provide to tell you whether you are entitled to Superannuation Guarantee contributions, whether you are required to comply with Personal Services Income (PSI) tax rules and whether the other party that you have contracted to provide services to is liable for PAYG tax withholding, FBT and payroll tax.

QUESTIONS

1. Who entered the contract with the other party?

2. Who provides services?

Stop here if you checked 'the other party' or 'both of you together' - you do need answer any further questions and can click the 'update advice' button now.

3. What fees are payable to you under the contract?

4. How are you made responsible for properly completing the contracted deliverables?

5. How significant are pure time-based fees and retainers to you?

6. How much equipment do you provide to perform the job?

7. What premises do you have for performing the work?

8. Can you delegate?

Getting someone else to undertake your administrative tasks such as bookkeeeping and billing does not count as delegation. Rather delagation must be over the performance of the principal work required under the contract. Note that if you check the last bullet, we will change your answer to the second bullet if you answer at question 10 that the contract is expressly one of employment.

9. Can you incorporate?

10. What is the intended characterisation?

11. What powers of control does the other party reserve?

12. How integrated and permanent are you within the business of the other party?

13. Do you run your own business?

14. Do you work in special jobs or special industries, or for special hirers?

ADVICE

There are four main tax obligations that the other party may owe on payments and other benefits it provides to you:

• PAYG tax withholding: The other party is required to withhold tax under the PAYG system from cash payments it makes to you as a reward for your services.
• Superannuation Guarantee (SG): you are entitled to superannuation contributions under SG legisaltion from the other party on the remuneration you earn for ordinary hours of work. This is on the proviso that you earn over $450 in the month from the other party, and if you are a child working, for work at least 30 hours in a week for the other party. Note that SG legislation does not require superannuation contributions to be paid on overtime hours worked, or any other hours outside the ordinary hours of work.
• Fringe Benefits Tax (FBT): The other party is required to pay FBT on the value of non-cash benefits is provides to you as a reward for your services. You do not need to pay income tax on the value of the non-cash benefits. The FBT the other party pays is instead of you needing to pay income tax on the value of the non-cash benefits.
• Payroll tax: The other party is required to pay payroll tax on the value of the remuneration package it pays to you.

We recommend that you check your contract to ensure that it does not require you to indemnify the other party for, or otherwise allow the other party to reduce the cash it pays to you for the cost to it of SG, FBT and payroll tax.

Personal Services Income (PSI) rules: you are NOT entitled to claim tax deductions as a business. Rather you can largely only claim the more limited range of tax deductions available for employees.

Answer strength indicator: Strong (78%). Determining whether employee or contractor tax status applies for application of the various different tax rules involves in large part weighing up potentially competing indicators (or factors). The answer strength percentage shows how strongly the indicators support the answers provided above. A person cannot reasonbaly proceed to adopt a tax position with less than a 50% liklihood that a court would consider the position adopted to be correct.

The remainder of this advice provides detailed explanation for these answers and sets out the background information and assumptions relied upon.

DETAILED EXPLANATION ABOUT THE RULES

What key obligations does an employer owe for each employee?

For each employee, an employer is required to:

• PAYG: withhold tax under the PAYG system from cash remuneration paid
• Superannuation: make superannuation contributions under Superannuation Guarantee (SG) legislation on cash payments for ordinary hours of work (but note contributions are not required for individuals earnings under $450 in a month, or children who work less than 30 hours in a week.)
• FBT: pay Fringe Benefits Tax (FBT) on most non-cash benefits provided to the employee as a reward for their services
• Payroll tax: pay payroll tax on the value of the total remuneration package

Do each of these obligations on the employer apply to payments to contractors too?

These obligations also apply to some contractor arrangements that are not too disimilar from employmment, but which fall short of being actual employment for tax purposes. However, each obligations has different rules about which contractors it extends to. Coverage for one obligation does not necessary means coverage under all the obligations.

Analysis of whether the obligations apply involves first considertaion of whether you are an actual employee, and if you are not an employee, consideration of whether the rules for each obligation extend to cover you as a contractor.

How to distinguish between an employee and a contractor?

The key distinction between an employee and a contractor is between an individual who is subject to the control and direction of the other party about the manner to perform the work (hence a servant) and an individual who agrees only to produce a result, deliverable or outcome freely by means and and in the manner of his own choosing.

The the Full Court of the High Court said in Humberstone v Northern Timber Mills (1949) 79 CLR 389:

• If the work done by one person for another is done subject to the control and direction of the latter person as to the manner in which it is to be done the worker is a servant [ie an employee] and not an independent contractor. If, however, the person doing the work agrees only to produce a given result but is not subject to control in the actual execution of the work he is an independent contractor.

Although this was not a tax case, in making the statement, the High Court drew on a very similar statement made by Chief Justice Latham a few years earlier in the High Court payroll tax case of Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539. The statement should therefore be seen as equally applicable in the tax context.

The nature of some jobs, especially those requiring exercise of independent technical skill, leave little scope for actual day-to-day control by the principal over the manner in which the work is performed by the individual. It is not necessary to show that actual control has been exercised over the individual to be an employee. A capacity to control the individual is sufficient to show control. The Full Court of the High Court said in Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561 that:

• What matters is lawful authority to command so far as there is scope for it, if only in incidental or collateral matters.

Even capacity for the principal to control incidental and collateral matters can still mean the individual is an employee. Proper characterisation of a worker as either an employee or contractors can be unclear if there is both some control (or some capacity to control) the manner in which the worker does the work and and some freedom for the worker to choose the means and manner to produce an agreed result without being subject to instruction. Courts consider the entirety of the arangement and weigh up factors that point either towards the worker being an employee or a contractor before reaching a conclusion.

Factors that have been considered in recent cases include:

• the relative value of the labour component of the job
• the relative value of tools and equipment provided and expenses incurred by the worker to perform the work
• the liability risk borne by the worker for deflective or incomplete work
• any rights the worker has to delegate the performace of the work or part of it
• whether payment is conditional upon successful completion of an agreed required result, outcome or deliverable
• whether payment is time-based (or at least on the basis of a convenient time-proxy, like per courier delivery)
• the capacity for control over the worker and over the manner in which the work is done
• integration of the worker with the ongoing business of the principal
• whether annual and sick leave entitlements are given
• whether the worker issues invoices for work done in order to be paid
• the amount of business goodwill that the worker has that gives the worker the ability to attract multiple unrelated customers to engage him or her directly.

These factors were recognised by the Full Court of eth High Court in Hollis v Vabu Pty Ltd (2001) 207 CLR 21 and the Full Federtal Court SG cases of Roy Morgan Research Pty Ltd v FCT [2010] FCAFC 52 and On Call Interpreters and Translators Agency Pty Ltd v FCT (No 3) [2011] FCA 366 (2011).

Different factors carry different weights.

The cases recognise control as a key factor, if not the most influential factor, in determing that a worker is an employee. A contract that gives the principal control over the worker is the opposite of a contract to produce a result where the worker is free to choose the means to produce it. The NSW Court of Appeal in the PAYG withholding case of World Book (Australia) Pty Ltd v FCT (1992) 23 ATR 412 said that:

• Undertaking the production of a given result has been considered to be a mark, if not the mark, of an independent contractor.

Justice Rich in Queensland Stations (1945) said that, in short, greater control abrogates the right of the individual right to freely choose the means to achieve the contracted result, and increases the likelihood of employee characterisation. To quote him:

• A right to delegate the contracted work is conclusive, or close to conclusive, of contractor status. That remains the case even if the worker has not exercised his or her right to delegate any part of the work, or chose to perform it all personally. Quite simply, a person cannot possibly be an employee if he or she is not required to do the work personally. However, if the person does not actually delegate any part of the work, then questions can arise about whether there genuinely is a right to delegate.

Which contractors does superannuation coverage under Superannuation Guarantee legislation extend to?

Superannuation coverage under Superannuation Guarantee legislation extends to "a person who works under a contract that is wholly or principally for the labour of the person". The relevant provision is sub-section 12(3) of the Superannuation Guarantee (Adminsitration) Act 1992.

In the case of Neale v Atlas Products (Vic) Pty Ltd (1955) 94 CLR 419 involving an equivalently worded extension to the PAYG tax withholding provisions, the Full Court of the High Court said that the obligation did not arise where the individual had a right to delegate the work:

• [I]f the contract leaves the contractor free to do the work himself or to employ other persons to carry it out the contractual remuneration when paid is not a payment made wholly or at all for the labour of the person to whom the payments are made. It is a payment made under a contract whereby the contractor has undertaken to produce a given result and it becomes payable when, and only when, the contractual conditions have been fulfilled. Moreover, the nature of the payment is not affected by the circumstance that the contractor has himself performed the bulk of the work under the contract or that it was the expectation of the parties that he would do so if, in truth, the contract did not create the relationship of master and servant.

In Superannuation Guarantee Ruling 2005/1 (SGR 2005/1) the ATO explains at para 11:

• [W]here the terms of the contract in light of the subsequent conduct of the parties indicate that:
  • the individual is remunerated (either wholly or principally) for their personal labour and skills;
  • the individual must perform the contractual work personally (there is no right of delegation); and
  • the individual is not paid to achieve a result,
  the contract is considered to be wholly or principally for the labour of the individual engaged and he or she will be an employee under that subsection.

In other words, the ATO will only accept that an individual can be covered by SG if the two key indicia of contractor status are absent. That is, the contract cannot be for an agreed result, and the individual must be prohibited under the contract from delegating work. Then personal labour of the individual must still be the principal component under the contracts, rather than the provision by the individual of equipment, materials or goods.

The ATO relies on the unanimous Full Court of the High Court decision in Neale v Atlas Products (Vic) Pty Ltd (1955) 94 CLR 419 and the New South Wales decision in World Book (Australia) Pty Ltd v Federal Commissioner of Taxation (1992) 27 NSWLR 37 in support of the approach it takes in the ruling. More recent ATO online guidance also operates on our analysis on the basis that it is only if all three of the requirements in para 11 of the ruling are met that the extension to SG applies, and not otherwise.

The court in Neale said:

• It may be, however, that in cases where an independent contractor is required by the terms of his contract to perform the contractual work himself the addition to the general definition [to cover contracts principally for labour] may have some application, but it is unnecessary, in the circumstances of this case, to express any concluded view concerning contracts of such a special class. If this be so, however, it is the result rather of chance than design for the extension of the defined term was not, in our view, directed to considerations of the nature referred to.

Rather, the court in Neale suggested that the extended coverage created the words used in s.12(3) was to ensure that all types of remuneration paid to actual employees was covered, in case the phrase "allowance" that is used in the PAYG tax withholding provisions was not viewed as sufficiently broad to catch all types of cash remuneration that could be paid. In essence, the court was suggesting an extension that uses the words in s.12(3) was probably intended as a legislative protection in case the view of the minority of justices in another case called Mutual Acceptance that the alternative term "allowance" was not a sufficiently broad catch-all phrase to cover all types of remuneration ultimately prevailed.

The ATO recognises that weighing up the indicia of actual employment can be complex, particularly the factual matrix surrounding the degree of control able to be exercised over the employee. ATO guidance has, on our analysis, at its heart the idea that the extended SG coverage to contracts principally for the labour of the person " is at least as broad as the concept of actual employment. This accords with the view of the High Court in Neale extracted above that the extra words may not add anything (or at least do not by design add anything) to the scope of individuals intended to be covered. An individual should only be treated as an actual employee by the ATO if all of the three conditions identified by the ATO in para 11 of SGR 2005/1 for SG coverage under s.12(3) are also met. The effect is to assimilate the two tests, but that was the effect of what the court was also saying in Neale. The explanation in para 22 and 23 of SGR 2005/1 also provides some support for that assimilation, at least where the relationship in not clearly one of common law employment:

• 22. In most cases, it will be self-evident whether an employer/employee or a principal/independent contractor relationship exists. However, it is sometimes difficult to discern the true character of the relationship from the facts of the case as the intentions of the parties may be unclear or ambiguous, such as where the terms of the contract are disputed by the parties or are otherwise in apparent conflict ... 23. If it is considered that the relationship at common law is one of principal and independent contractor or the determination of the status of the worker is unclear, the extended definition of 'employee' in the SGAA [in s.12(3)] must be considered.

• can delegate; or
• is paid to produce a result.

When is a payment for producing a result?

A contract to produce an agreed result exists where payment is conditional on completion of that result, outcome or deliverable. A contract to produce an agreed result is the hallmark of an independent contractor agreement, is conclusive or near conclusive that the individual is not an actual employee, and means the contract is not one for the labour of the individual to which the SG extention could apply.

The case of Neale considered when a payment is for producing a result as follows:

• [W]hereby the contractor has undertaken to produce a given result and [the amount to be paid] becomes payable when, and only when, the contractual conditions have been fulfilled.

In Neale, it was held that the regularity of weekly payments and work for the tilers engaged essentially on a permanent and ongoing basis did not disturb the contractual basis of hire. The individuals were still seen to be paid to produce a result each week. Justice Sheller in the World Book case (with whose reasons Justice Clarke agreed) also held that a contract to produce a result would be outside the scope of the extension. Justice Sheller adopted the phrase from Neale in the following terms:

• In my opinion by retaining the description of contract wholly or principally for the labour of a person the legislature has maintained a distinction between a contract for labour [ie a contract of employment] and a contract, to use the expression of the High Court in Neale at 425, "whereby the contractor has undertaken to produce a given result and [the amount to be paid] becomes payable when, and only when, the contractual conditions have been fulfilled."

• Undertaking the production of a given result has been considered to be a mark, if not the mark, of an independent contractor, see for example Queensland Stations Pty Ltd v FCT (1945) 70 CLR 539 at 545 and 548. [A] contract which is undertaken by the contractor to produce a given result is not, in my opinion, a contract wholly or principally for the labour of a person for reason that the labour is undertaken not for the principal but for the contracting party himself to produce the result he has contracted to produce.

The ATO cites this extract from Justice Sheller, and re-expresses it, but less definitively, as follows in SGR 2005/1 at para 42:

• Where the substance of a contract is to achieve a specified result, there is a strong (but not conclusive) indication that the contract is one for services.

And at para 46 the ATO says:

• While the notion of "payment for a result" is expected in a contract for services, it is not necessarily inconsistent with a contract of service.

That qualification should only be applied where the payments are commissions for sales. This is due to the mixed and unsatisfactory state of the case law about commissions for sales and whether such payments can in truth be regarded as strongly indicating that the worker is paid for a result (the result being the sale).

What effect does a right to delegate or incorporate have?

The case of Neale involved tilers who worked on an effectively permanent basis and were assigned job sites to work at each week. They could delegate all their work, but none chose to delegate any portion of it. The Full Court of the High Court unanimously held they were not employeees and were not paid principally for ther labour. The same conclusion was reached in the subsequent case of World Book (Australia) Pty Ltd v FCT (1992) 23 ATR 412 (NSWCA) involving door to door salesman paid on a commission only basis, who could delegate and work at places and times of their own choosing with minimal control by the principal over the selling means adopted. The case was about an employee PAYG tax withholding provision with the same extension as the SG extention to contractors engaged principally for their personal labour.

The ATO accepts that an individual with a right to delegate is not caught by the extention of SG to persons engaged principally for their labour, and that actual delegation is not required (ie the right to delegate does not need to be exercised). This is consistent with Neale and the subsequent decision in World Book. At para 72 of SGR 2005/1 the ATO says:

• It is clear from Neale and World Book that a person who has 'a right to delegate work' (whether or not that right is exercised) does not work under a contract wholly or principally for his or her labour and that a contract for labour [ie a contract of employment] must be distinguished from 'a contract to produce a given result.

• If an individual has unlimited power to delegate the work to others (with or without the approval or consent of the principal), this is a strong indication that the person is being engaged as an independent contractor. Under a contract for services, the emphasis is on the performance of the agreed services (achievement of the result). Unless the contract expressly requires the service provider to personally perform the contracted services, the contractor is free to arrange for his or her employees to perform all or some of the work or may subcontract all or some of the work to another service provider. In these circumstances, the contractor is the party responsible for remunerating the replacement worker.

In short the ATO accepts in the ruling that a right of an individual to delegate the entirety of the work to someone else that the individual is responsible for remunerating is a strong indication that the individual is not an employee, and this remains the case even if the right is not exercised, and even if exercise of the right is subject to the approval and consent from the principal. The ATO in more recent guidance is firmer, and demonstrates that a right to delegate excludes any possible application of SG. It is a fundamental principal that an individual cannot possibly be an employee unless he is required to perform at least some of the work himself. Therefore, if the individual was free to delegate the entirety of the work, he cannot be an employee, even if he chose to do all the work personally.

The case of Neale makes clear that there is no requirement to actually exercise the right. However, the right would still need to be genuinely available. Without any actual delegation, the genuineness of the right may not be able to be automatically assumed. Contractual terms that the principal will not unreasonably withhold consent assists to show genuineness. If any other contractors working on similar tasks for the same principal and with similar levels of experience and service have delegated then that will help to show that the principal does in practice allow the work to be delegated by the person it contracts with (and that personal service is not required).

Likewise, it assists to show that the principal does in practice allow the work to be delegated by the person it contracts with (and that personal service by the contracting party is not required) if some workers have been allowed to use their own company or trust to contract with the principal in place of themself. AMP v Chaplin (1978) says that an ability to incorporate is an important indication that the individual is not an employee.

APPLICATION OF THE RULES TO YOUR CIRCUMSTANCES

Are you paid for producing a result?

you agreed to a time-based fee for each hour, week or month worked that is not dependent on achieving any speicified deliverable, outcome or result
. A time-basis of payment that is not dependent on producing results is a strong indicator that you are an employee and are paid for your labour.

Do you have your own equipment, premises and facilities to perform the work?

The amount of equipment you provide and having your own premises are indicators of contractor status. Providing equipment of significant value is an indicator of contractor status. If the equipment the worker provides is so valuable that it exceeds the value of the labour required for the work, then that is near conclusive of contractor status because you would then be paid principally for provising equipment rather than princiaplly for your labour. Providing minor equipment, like a computer, is not indicative of either employment or contractor status.

You provide only minor (if any) equipment for the job.

Can you delegate the work?

A genuine right to delegate is virtually conclusive of contractor status. Quite simply, an individual cannot be an employee unless the individual is required to perform the work personally. An ability to delegate is astrong indicator that you are not an employee nor paid for your labour

However, the contract expressly requires you to perform all the contracted work personally. You cannot delegate any portion of the contracted work to someone else that you are responsibnle for paying.

How much discretionary right of control does the other party have over the manner in which you do the work?

Control or the right to control the manner in whch the work is done is the flip-side of being paid to produce a pre-determined required result by means of your own free chossing (including through choosing to delegate). Control or the right to control is the hughly indicative of an employee characterisation.

The contract freely permits you to determine how to perform the work within the paramters and specifications set out in the contract, and in compliance with the laws, and the other party can instruct you to comply with the contract and laws. Compliance with the contractual terms and laws are requirements anyway, so do not detract from the freedoms you enjoy to determined how to fulfill the contract.

To what degree are you integrated into the business of the other party?

Recent cases give significant attention to the level of integretation of the worker with the business of the principal in considering whether the worker is an employee. It is not clear whether integration is a separate indicia of employment or an aspect of control, but either way integration points towards characterisation as an employee.

Aspects of the relationship here that show integration are as follows:

• You need to regularly attend the other party's business premises in performing the contracted work.
• You do not issue invoices for work before you can be paid for it (nor recipient created invoices where allowed under GST law). Rather you are paid through the payroll.

Conclusion for PAYG, SG, FBT and payroll tax

On balance from weighing up these factors, you are an employee and are paid principally for your labour. Each of the four employment-related obligations applies and for which the other party is liable, ie PAYG, SG, FBT and payroll tax.

Personal Service Income (PSI) rules

Personal services income (PSI) rules deny business tax tax deductions for individual contractors, and allow them only the more limited range of tax deductions available to employees. Also, if the individual contracts using his or her own company or trust rather than directly with the client, then the PSI rules will attribute the income from the contract to individual to be taxed at matginal rates to the extent that the income is not already paid promptly to the individual by his or her company or trust as salary.

The PSI rules have broad application. The rules applies to all contractors unless at least one of several exemptions apply. The exemptions are if:

• Contract principally for provision of equipment: The value of the equipment the contractor provides for the work exceeds the value of the labour component of the work, such that payment under the contract is not mainly for personal work efforts and skill - a common example is a truck ownwer-driver.
• Contracts geneuinely for results: At least 75% of income earned by the contractor from providing personal services is paid for producing results for which the contractor is required to provide any equipment necessary to complete the contract and is laible for any defective work.
• More than one significant client and clients obatined from advertising to the public: At least 20% of income earned by the contractor from providing personal services during the financial year is from a second or greater number of unrelated clients, and at least one of its clients that it provides paid services during the year it gained from advertising to the public or a section of the public
• More than one significant client and a significant portion of work done by second individual: At least 20% of income earned by the contractor from providing personal services during the financial year is from a second or greater number of unrelated clients, and the contractor used a second individual or greater number of individuals to perform at least 20% of the work (by market value) needed to earn its total services income for the financial year (or has an apprentuice for at least half the year).
• More than one significant client and separate business premies: At least 20% of income earned by the contractor from providing personal services during the financial year is from a second or greater number of unrelated clients, and the contractor provides the services from business premises that the contractor has exclusive use of (i.e. not a shared area) and which have a separate signposted entrance and are phsically separate from any residence.
• Personal Services Business (PSB) determination: The Federal Commissioner of Taxation issued the contractor with a PSB dtermination, which he will do if he is satisfied that the contractor could normally be expected to satisfy at least one of the other exclusions but unusual circumstances in the year prevented it the particular year.

You are already an employee engaged directly by the other party, so you would already be restricted to the deductions available to employees. The deduction limitations imposed under the PSI rules already apply to you without needing to consider the operation of the PSI rules.

BACKGROUND

The answers have been determined from the following information:

1. Contracting personally: Did you as an individual enter the contract with the other party? Yes

2. Service contract: Is the contract for the provision of services to the other party for a fee? Yes

3. Results contract: Are payments to individual under the contract conditional on specified results being achieved? No

4. Measurable deliverable: Is it able to be objectively measured or assessed when the contracted deliverable is successfully completed by individual ? No

5. Liability to remedy defects: Is the individual liable for remedying defective work? No

6. Commissions: Are the payments for achieving results in the nature of commissions for achieving sales or for completing repeated similar small tasks? No

7. Time-basis of payment: Are there payments made on the basis of time? e.g. hourly, daily, weekly, monthly. No

8. Leave payments: Is the individual paid for days of sick leave, annual leave or personal leave when no work is performed? No

9. On-call retainers: Is the individual paid a retainer to be available for work if called upon? No

10. Retainers to commission agents: Is the individual paid a time-based retainer for the time worked to supplement commission income? No

11. Are time-based payments and retainers combined less than 25% of the total payments to the individual? No

12. Equipment: Ignoring minor and incidental items (e.g. with a total value less than $3,000), does the individual supply significant equipment in order to perform the job? No

13. Value of labour component: Is the labour value of the work less than the value provided by the equipment? No

14. Separate business premises: Does the individual provide the services from business premises that the individual has exclusive use of (i.e. not a shared area) and which have a separate signposted entrance and are phsically separate from any residence? No

15. Personal service required: Does the contract explicitly require the individual to perform all the contracted work personally without any right for the individual to delegate any of the contracted work to his/her own workers? Yes

16. Delegation: Does the contract permit the individual to delegate at least some of the work by engaging another person or persons (whether as his/her own employee or his/her own sub-contractor) to perform at least some of the contacted work and for whom the individual is resposnible for paying and responsible for the workmanship of? No

17. Has the right to delegate been in fact exercised? No

18. Is there a requirement for consent from the principal before delegating? No

19. Is the principal required to give consent to delegation where the request is reasonable? No

20. Does the agreement permit the individual to provide the services instead through his/her own family company or family trust? No

21. Reservation of power of control: Does the contract allow the principal to subsequently give any reasonable direction or set any reasonable policy that the individual is required to comply with? No

22. Attendance: Does the individual need to regularly attend the principal's business premises in performing the contracted work? No

23. Ongoing function (over 180 days per year): Is the function that the individual performs an ongoing requirement for the principal that is ordinarily required by the principal for more than 180 days each year? No

24. Training: Has the individual been trained on the principal's policies, internal procedures and way of doing things? No

25. Uniform, business cards, stationery: Does the individual wear uniform or a badge or have business cards or stationery that identifies the individual as being a part of the principal (as opposed to only an agent for the principal)? No

26. Permanence of hire: Is the contracted duration of work lengthy, e.g. either permanent or for or an intended duration of at least two years? No

27. Work frequency (over 90 days): Did the individual (and any of his/her own workers who helped perform work under the contract) collectively perform work for the principal on more than 90 days during the financial year? No

28. Australian Business Number (ABN): Has the individual quoted an ABN? (If the individual is a contractor, then he/she should be quoting an ABN.) No

29. Invoices: Is the individual only paid for invoices that are issued for the work? No

30. Special industries, jobs and hirers: Does the individual work in the broadcasting, sports, music, entertainment, domestic home care, home door-to-door sales or insurance sales industries, as a religous practitioner, or for a labour hire agency? No

31. Director: Is the individual engaged under the contract to serve on the managing board of the principal? (e.g. as a director in the case of a principal that is a company) No

32. Intended characterisation (employment): Does the contract state that the individual is employed by the principal? No

33. Intended characterisation (independant contractor): Does the contract state that it is intended to be an independant contractor relationship, i.e. not employment? No

34. Personal Services Business determination: Has the ATO issued the individual with a Personal Services Business (PSB) determination that is applicable for the year. No

35. More than one significant client: Does the individual earn 20% or more of its services income for the financial year from a second or greater number of unrelated entities? No

36. Own clients from advertising to the public: Did the individual gain at least one of its clients that it provides services to from advertising to the public or a section of the public. No

37. Significant portion of work done by second individual: Did the individual use a second individual or greater number fo individuals to perform at least 20% of the work (by market value) needed to earn its total services income for the financial year? No

ASSUMPTIONS

This advice is given on the assumption that the contract is between Australian parties, the contract is being acted on in accordance with its terms, any contractual terms that are not in writing can still be proven from other evidence, and the contracted work is being undertaken wholly in Australia. Differences in outcomes can arise if those assumptions are not all true. The answer strength indicator in this advice has not been adjusted to reflect any added practical difficulty in proving or rebutting the existance of terms that have not been recorded in the contract in writing.

Software always has limitations becasue it cannot think of everything, and this software remains a beta version that has not been comprehensivley tested. The accuracy and completeness of the content produced by this tool should always be separately checked and confirmed before being acted on.