Compliance program 2011-12

Contractors

Many contractors operate as sole traders or through companies, partnerships or trusts. In many cases, the income received for the work they do may be classified as personal services income. Income received for a particular contract is personal services income if the majority (more than 50%) of it is for the skills, knowledge, expertise or efforts of the person performing the services.

Individuals streaming their personal services income through another entity may incorrectly split their income with an associate, sometimes a spouse or child, in a much lower income tax bracket. These types of arrangements often mean people in the same work situation inappropriately pay different levels of tax.

We will continue our test-case program to clarify the law relating to personal services income. We will provide further information to contractors and tax practitioners to help them get the tax treatment right.

We will use information received from labour hire firms to identify contractors, particularly in engineering and computer technology industries. We may review or audit the tax affairs of these contractors where we see apparent anomalies.

Sections within Micro enterprises

• Employer obligations
• Contractors
• Information matching
• Government payments
• Internet trading
• Reconstruction activity
• Cash economy
• Small business benchmarks
• Investments
• Self-managed superannuation funds
• Business activity statements
• Wine equalisation tax producer rebate
• Excise equivalent goods
• Managing tax debt