Employers play a major role in ensuring the integrity of the tax and superannuation systems is maintained, with almost half of all tax collected flowing through about 800,000 employers.
This year, we reviewed the tax affairs of more than 25,000 businesses to ensure they were reporting the correct amounts of PAYG withholding tax.
Some employers try to avoid their tax and superannuation responsibilities by improperly treating workers as contractors. This behaviour undermines the tax and superannuation systems through avoidance of PAYG withholding tax and can create unfair competition for honest employers. From almost 1,200 audits conducted during 2012–13, we found that in 41.5% of businesses that were engaging individuals as contractors, the workers were employees at law and the employer was incorrectly treating them as contractors. The reasons for this were generally a lack of understanding and competitive pressures.