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Types of not-for-profit workers

It's important to know if your workers are employees, independent contractors or volunteers.

Last updated 11 February 2024

Types of workers

Workers in your not-for-profit organisation can be employees, independent contractors or volunteers. The status of a worker may affect the tax treatment of dealings between your organisation and that worker.

Employee

Generally, an individual is an employee if they:

  • are paid for time worked
  • receive paid leave – for example, sick, annual, recreation or long service leave
  • are not responsible for providing the materials or equipment needed to do their job
  • must perform the duties of their position
  • agree to provide their personal services
  • have work hours set by an agreement or award
  • are recognised as part and parcel of your organisation's business
  • do not take commercial risks and cannot make a profit or loss from the work performed.

Independent contractor

An independent contractor is an entity (such as an individual, partnership, trust or company) that agrees to produce a designated result for an agreed price. In most cases an independent contractor:

  • is paid for results achieved
  • provides all or most of the necessary materials and equipment to complete the work
  • is free to delegate work to other entities
  • has freedom in the way the work is done
  • provides services to the general public and other businesses
  • is free to accept or refuse work
  • is in a position to make a profit or loss.

Find out how to determine if workers are employees or independent contractors.

Volunteer

Although there is no legal definition of 'volunteer' for tax purposes, a volunteer does not work under a contractual obligation for remuneration and would not be an employee or independent contractor.

Reporting and paying tax

Your not-for-profit organisation has similar reporting obligations to businesses, covering its income tax (if not exempt) and other obligations.

For example, your organisation uses activity statements to report and pay a number of tax obligations, including GST, pay as you go (PAYG) instalments, PAYG withholding and fringe benefits tax. Learn more about statements and returns.

There are a range of options for paying your tax. If you can’t pay on time it’s important to contact us straight away to make appropriate arrangements to pay your tax debt. If you’re due for a refund we can pay it directly into your nominated account.

Keeping records

Keeping records for employees and contractor is an essential part of running your not-for-profit organisation. You must keep your records in an accessible form (either printed or electronic) for five years and they must be in English.

The Not-for-Profit LawExternal Link service can provide legal information and advice about these topics.

The obligations your not-for-profit organisation has for its employees and independent contractors.

NFP organisations may need to pay different types of taxes and may be entitled to concessions, credits and refunds.

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