Do you know how to classify a worker?
20 December 2022
Do you know if your new worker is an employee or a contractor? When you employ a worker, it's important to correctly classify them because it affects:
- tax, super and other obligations, such as workers compensation insurance
- workers' entitlements.
Correctly working out whether a worker is an employee or contractor helps to build a more level playing field for all Australian businesses.
To help small businesses make this decision, we're drafting a new public ruling and practical compliance guideline.
These documents replace our previous advice products, which have been affected by recent High Court decisions.
The new guide about classifying workers is Practical Compliance Guideline PCG 2022/D5 Classifying workers as employees or independent contractors – ATO compliance approach.
We also have a Draft Taxation Ruling TR 2022/D3 Income tax: pay as you go withholding – who is an employee.
These documents are open for consultation until 17 February 2023. You can find out more and give us your feedback here.
Remember, registered tax agents can help you with your tax and super matters.
Help us help small businesses understand how to classify their workers.