By David Brown
So you have have carefully studied the arrangements you have with your independent contractors and taken some good advice to protect yourself from the argument that you may be “Sham Contracting”. You can now sit back and breathe a sigh of relief that they are responsible for all their benefits, right?
Not So Fast!
Did you know that even with independent contractors, you may have a requirement to pay their Superannuation Guarantee Contributions?
While we are not tax experts and can’t give you tax advice, we can tell you what the ATO says about this area.
Contractors paid mainly for their labour are employees for superannuation guarantee purposes. This is the case even if the contractor quotes an Australian Business Number (ABN).
In other words, if you have an independent contractor who is mainly providing their personal skills/labour under the contract they have with you, then you may well need to pay Super contributions for them.
Where to From Here?
The ATO provides you with a handy superannuation guarantee eligibility decision tool, which is certainly worth using. For more in depth advice, we would recommend you speak with your tax accountant/legal advisor.
In the meantime, if the whole issue of sham contracting and determining whether you have employees or contractors is keeping you up at night, we are happy to work through this with you.