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    Your workers

    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.

    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.

    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 employment and contractor records 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.

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    See also:

    Last modified: 12 Dec 2017QC 16868