Contractors or Employee? Why is it important?
A recent decision by the Administrative Appeals Tribunal (AAT) should serve as a warning for any employer who employs independent contractors. In a case brought by the Tax Commissioner, a company that employs over 1000 contractors to provide interpretation and translation services is now potentially liable for superannuation guarantee payments to all of its contractors ‐ now and retrospectively.
So what went wrong? The problem is that there is no conclusive definition of who or what an independent contractor is. The fact that an agreement might state that someone is a contractor is considered merely a ‘label’ by the court. Where the contractor primarily supplies their personal labour, the dividing line between an employee and a contractor is even harder to distinguish as the tools of the contractor’s trade is their knowledge and expertise. The case before the AAT, Associated Translators and Linguists Pty Limited and Commission of Taxation [2010] AATA 260 is a case in point.
Associated Translators and Linguists Pty Limited (ATL) provide interpretation and translation services in 90 different languages across the country. ATL has two full time interpreters and translators but the bulk of the service is managed through a ‘panel of consultants’. The panel of over 1000 interpreters and translators fulfil between 1300 and 1500 client assignments per month. The panel of consultants are predominantly individuals who contract back to ATL when a job comes up in their area of expertise that cannot be fulfilled by the full time staff.
Disclaimer:
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.
