Employee or contractor
Your withholding obligations depend on whether your worker is an employee or contractor. In general:
- employees work in your business and are part of your business
- people you hire as apprentices are also your employees
- contractors run their own business and provide services to your business.
If your worker is an employee you generally have to withhold amounts from payments you make to them and send the withheld amount to us.
If your worker is a contractor you generally do not withhold amounts from payments you make to them (unless they request withholding by entering into a voluntary agreement with you).
However if a contractor does not quote a valid ABN you should withhold 49% from payments you make to them.
Having an ABN or working on a casual basis does not automatically make a worker a contractor - the specific conditions under which the worker is engaged need to be considered.
Employee/contractor decision tool
Your withholding obligations depend on whether your worker is an employee or contractor.