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Employee or contractor - tax and super obligations compared

A guide to the tax and super obligations of a business when working for them as a contractor compared to an employee.

Last updated 14 June 2023

The table below outlines the main tax and super obligations a business has when you're working for them as a contractor compared to working as an employee.

Comparison of contractors and employees for you and the business

As a contractor

As an employee


  • put money aside to cover the tax owed from your contracting work (or you have a voluntary agreement for the business to take tax out of payments they make to you)
  • complete and lodge activity statements you get from the ATO
  • report and pay GST on an activity statement if you are registered
  • keep records of your income (including invoices you issue) and business expenses
  • complete your tax return and the business and professional items schedule using your records
  • look after your own super unless you are contracted mainly for your labour
  • provide your own business insurances, including personal income protection for yourself and workers' compensation for anyone working for you
  • put money aside to pay for any holidays or if you get sick
  • work out if you are receiving personal services income. 



  • provide your tax file number (TFN) to your employer by filling out a TFN declaration and the employer withholds tax from your salary and wages
  • keep records for any work-related expenses
  • complete your tax return using the payment summary or income statement from your employer(s) and other information provided by the ATO's prefilling service to assist you
  • can choose which super fund your employer super contributions are paid into.


The business:

  • pays you for the work you do based on the working arrangement, generally after you have submitted an invoice.


The business:

  • pays you your wages or salary on a weekly, fortnightly, or monthly basis
  • withholds tax from the money they pay you and sends it to us
  • provides you with a payment summary after the end of the financial year
  • makes super contributions as required into your super fund
  • pays you any sick leave, annual leave and any other leave you may entitled to
  • provides workers compensation and insurances
  • provides pay and conditions as required by the Fair Work Ombudsman.