Employee or contractor myths – workers with ABNs

When you hire a worker, forget the common myth that they’re a contractor simply because they have an ABN.

Your worker could have an ABN for a number of legitimate reasons, but this makes no difference to whether you should treat them as an employee or contractor.

When it comes to tax and super, working out if your worker is an employee or contractor is based on the terms and conditions of their working arrangement with you. It’s important to get it right because your tax and super obligations can change based on those arrangements.

There are several tests that help determine whether the arrangement you have with a worker is a genuine business relationship or an employment relationship.

1.    Does the contractor only work for you or for other firms as well?

2.    Does the contractor only supply labour time and expertise or are there materials or Intellectual property involved.

3.Is your contractor available to the general public to supply their services i.e. has a website or advertises?

Each contractor case needs to be looked at on its own merits and an employer would be well served to seek advice to make sure you are meeting your requirements and your contractor arrangements meet your needs.