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Your tax and super obligations

Your tax, super and other government obligations vary depending on whether your worker is an employee or contractor.

Last updated 5 January 2017

If your worker is an employee you'll need to:

  • withhold tax (PAYG withholding) from their wages and report and pay the withheld amounts to us
  • pay super, at least quarterly, for eligible employees
  • report and pay fringe benefits tax (FBT) if you provide your employee with fringe benefits.

If your worker is a contractor:

  • they generally look after their own tax obligations, so you don't have to withhold from payments to them unless they don't quote their ABN to you, or you have a voluntary agreement with them to withhold tax from their payments
  • you may still have to pay super for individual contractors if the contract is principally for their labour
  • you don't have FBT obligations.

Remember, it's against the law to wrongly treat an employee as a contractor so you need to check that you've got it right. If you don’t get it right, penalties may apply.

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