Super for contractors

What is a contract wholly or principally for labour?

A contract for labour can be made either orally or in writing.

A contract may be considered wholly or principally for labour, if the contractor:

• is remunerated wholly or principally for their personal labour and skills,
• must perform the contract work personally, and
• is paid by reference to hours worked rather than completion of the contract.

If you make a contract with someone other than the person who will actually be providing the labour, there is no employer-employee relationship.

The following two situations are examples of when the contract is not for the labour of the individual:

• if you make a contract with a company, trust or a partnership, or
• if the person you have the contract with is free to hire other people to perform the work, even if the person ends up performing the work themselves.

How do I work out the labour part of the contract?

If the values of the various parts of the contract are not detailed in the contract, the ATO will accept their market values and will take the normal industry practices into consideration.

If the labour component of a contract cannot be worked out you can use a reasonable market value of the labour component of the contact to represent the salary and wages of an employee.