KEEPING UP TO DATE

Why it’s so important to know if you’ve engaged an employee or contractor 

Don’t let the Superannuation, PAYG and FBT implications catch you out!

We spend a lot of time supporting clients to correctly allocate the people they engage as Employees, Contactor deemed an Employee or Independent Contractors. For some of our clients, the line can feel blurry in the beginning. Once you understand the definition, it is clear cut and easy to implement.

If you are working with independent contractors, it’s important to confirm that the correct documentation is in place, and they don’t meet the definition of an employee by accident.  2022 High Court decisions impacted the definitions and compliance expectations. With pay-as-you-go, superannuation and FBT obligations for employers changing there are even more reasons to be aware and be across the details.

Pay as you go implications: Single Touch Payroll means reporting requirements can cause issues if you miss allocate an employee as a contractor. Backpay and potentially penalties can cause headaches.

Superannuation: is increasing to 11% from July 1. A contractor deemed an employee should be getting Superannuation from their employer and not funding it themselves. Have you factored in the additional .5% for those who meet the criteria?

FBT: liability in 2023 might increase if you’re providing car parking as a benefit for employees. Thinking that your FBT as the person is an independent contractor can result in a FBT surprise. The criteria around car parking being FBT free has changed. As the employer, it’s important to ensure compliance around changes to FBT and correct payment of what your business owes so that the cost a business incurs when providing a fringe benefit or exempt benefit is allowable as a tax deduction. You may not be able to deduct the expense until the FBT is paid – in particular, entertainment expenses.

If you need help to correctly identify whether you have employees, contractors deemed employees or contractors making up your team, reach out to us. We are here to help.