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  • Employee/contractor decision tool

    On 9 February 2022, the High Court handed down decisions in CFMMEU v Personnel Contracting [2022] HCA 1 and ZG Operations v Jamsek [2022] HCA 2, which impact ATO advice and guidance in relation to classifying workers.

    We are currently considering these decisions and the impact they will have in relation to the worker classification risk, and we have published a Decision impact statement.

    We are reviewing our public advice and guidance products – including the employee/contractor decision tool – and we will make any necessary updates to reflect the principles set out by the High Court.

    To check if your worker is an employee or contractor, you need to consider the whole working arrangement. There are a number of factors that need to be considered, not just the terms of the employment contract. There isn’t one factor that makes a difference on determination on its own.

    You can use the employee/contractor decision tool to help you work out if your worker is an employee or contractor for tax and super purposes.

    The decision tool is for use by businesses that engage and pay a worker.

    The tool is not designed for:

    • labour hire firms
    • individual workers
    • operators or drivers deriving income in connection with ride-sourcing arrangements.

    Difference between employee and contractor

    It's important to understand the essential difference between an employee and a contractor:

    • An employee works in your business and is part of your business.
    • A contractor is running their own business.

    We've developed a table outlining six of the factors that, taken together, determine whether a worker is an employee or contractor for tax and super purposes. This information helps in understanding each contributing factor involved in the decision-making process.

    What this decision tool gives you

    When using the employee/contractor decision tool, you need to accurately answer some questions about the working arrangement between you and your workers.

    After you've done this, you'll receive a report that outlines:

    • whether your worker is an employee or contractor for tax and super purposes
    • the tax and super obligations you need to meet.

    Note: The tool does not store the information you provide or the answers you select. You will remain anonymous at all times.

    Next step

    Media: Employee or contractor? Avoid the myths Link (Duration: 01:39)

    Important information

    The employee/contractor decision tool:

    • uses the information you provide to outline your tax and super obligations
    • draws on outcomes of court cases that considered various indicators to establish whether a person is an employee within the common law meaning of the term
    • does not consider other obligations – for example, payroll tax or WorkCover obligations
    • is designed to guide your decision.

    If you’re still unsure about your circumstances, you should seek independent advice or request a private ruling.

    See also

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    Last modified: 22 Apr 2022QC 19387