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Are you a contractor or an employee?

Are you a contractor or an employee?

There are many differences between contractors and employees – understanding these differences is crucial for contractors as it can affect your tax and superannuation responsibilities, intellectual property ownership, and insurance.

As a contractor, you’re operating a business that produces a result for an agreed price. In most cases, you’re a contractor if you:

  • Are paid for results achieved
  • Provide all or most of the necessary materials and equipment to complete the work
  • Are free to delegate work to others
  • Have freedom in the way you work
  • Provide services to other businesses
  • Are free to accept or refuse work
  • Are in a position to make a profit or loss.

Registrations for contractors

No matter what industry you’re working in as a contractor, there are some common numbers and registrations you may need.

  • Tax File Number (TFN) – If you are operating as a sole trader you must use your individual TFN. If you are part of a partnership, trust or a registered company you will need to apply for a separate TFN.
  • Australian Business Number (ABN) – Your ABN should be printed on all invoices or other documents relating to the work you provide.

Goods and services tax (GST) – As a contractor, you’ll need to register for GST if:

  • Your business or enterprise has a GST turnover of $75,000.
  • You provide taxi or limousine travel for passengers in exchange for a fare as part of your business, regardless of your GST turnover.
  • You want to claim fuel tax credits for your business or enterprise.

If you don’t fit into one of these categories, registering for GST is optional.

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Are you a contractor or an employee?

09 Mar, 2017

There are many differences between contractors and employees – understanding these differences is crucial for contractors as it can affect yo

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