It's essential to find out what your tax and super obligations will be when you start work as a contractor. Knowing these obligations from the start can save you time, money and stress later on.
As a contractor, you can be:
- an individual (sole trader) or
- working in your own company, partnership, or trust.
You might even call yourself an independent contractor, sub-contractor or a 'subbie'.
As a contractor, you're starting or running your own business, therefore you:
- need an Australian business number (ABN)
- need to choose a business structure
- may need other business tax registrations, such as GST
- need to pay tax and super
- need to know if your income is subject to the rules for personal services income
- are not entitled to paid leave if you get sick or injured
- may have to pay the cost to fix anything you damage in the course of your work
- may also have to pay the costs incurred by someone else if you cause an accident on someone else's property.
If you're a contractor in the building and construction industry, you must also lodge a taxable payments annual report (TPAR).
Contractors have different tax and super obligations to employees. Use, employee or contractor - what's the difference to check whether you should be an employee or contractor.
You can also review common myths about being a contractor which may help you work out your work type and position.Check if you're a contractor or employee and if you need to register for an ABN or certain tax roles.