Guide to contractors

Engaging contractors

Your contractors must meet their own tax obligations and you usually don't have to withhold amounts from payments you make to them.

However, in the following circumstances you may be required to withhold:

• You enter into a voluntary agreement with any of your contractors to withhold an amount from each payment you make to them, as detailed in the agreement. A voluntary agreement between you as a payer and an independent contractor brings payments to the contractor into the pay as you go (PAYG) withholding system.
• A contractor does not quote their ABN. If the contractor doesn't quote their ABN in their invoice for the work they have performed for you, you must withhold tax from your payment.
• The contractor provides their work or services for one of your clients under a labour hire arrangement between you and the client.

For more information about labour hire arrangements, refer to PAYG withholding and labour hire firms.

For individual contractors, you must also make super guarantee contributions for them if more than 50% of the value of their contract is for labour.

For more information about super contributions for contractors, refer to Super for contractors.

Contractors - home

Sections within Engaging contractors

• Voluntary agreements
• No ABN withholding