Why be an employer ?

Are you saying that Workcover and ATO have different criteria, ie that you can be a contractor according to the ATO and an employee according to Workcover?

I haven't used the ATO tool so I cant answer that.

I only know that common sense tells me if I hire a subcontractor,he supplies all paint,tools,vehicle insurances,and gives a quote,get paid when finished the total job,has retention monies held on each job,to me he is a contractor and when all this information is sent to Work-cover to get a determination,he is deemed an employee,there is something wrong with the system.

Where I failed in this is the work he does for me is continuous,I have hundreds of houses to paint every year therefore he is an employee.:mad:
 
The question (or dichotomy) of employee vs independent contractor is a difficult one to answer. The common law position is that 'it depends on the facts' - which isn't very helpful. So it's entirely plausible for Workcover to determine that one person is an employee even if the ATO holds a different view. There is no one 'correct' answer.
 
I remember someone told me a significant difference between employee and contractor was that the contractor was liable to remedy defective work at their own expense.

No that's only one small part of it,there is a long list of criteria.
They will not actually tell you the reason you failed ,just a Yes or No :confused:

http://www.workcoverqld.com.au/construction/articles/is-that-a-worker-youve-hired

Watch this movie and right at the end you think you have it worked out and you will see if the work is continuous,they are deemed employees anyway.
 
The whole system discourages endeavour and ignores reality.

ATO use to use the 80/20 rule.

Workcover NSW uses what ever they want.

I got audited by Workcover. At first they said I had $66k in undeclared wages. 12 months late and $1k paid by my accountant they said ok we were wrong but I under declared myself $1k and I owed them $19. Yes $19. I said whatever how do I pay that and they said , it was too small and they would write it off.

I blew up. You B$%^ds have cost me 12months of stress, $1k and countless lost time to paperwork and NOW you DONT want your $19!!!!

Unbelievable system. Peter
 
The whole system discourages endeavour and ignores reality.

ATO use to use the 80/20 rule.

Workcover NSW uses what ever they want.

I got audited by Workcover. At first they said I had $66k in undeclared wages. 12 months late and $1k paid by my accountant they said ok we were wrong but I under declared myself $1k and I owed them $19. Yes $19. I said whatever how do I pay that and they said , it was too small and they would write it off.

I blew up. You B$%^ds have cost me 12months of stress, $1k and countless lost time to paperwork and NOW you DONT want your $19!!!!

Unbelievable system. Peter
I feel your pain :mad:
 
While we're complaining about things that suck about being an employer.

Superannuation.

Firstly it's going to get higher. 9% to 12% in the next few years.

Secondly you have to deal with a number of different superannuation companies since the government legislated free choice. And super companies are a pain to deal with. I get the feeling they were all small companies who through compulsory super had a volume of work thrust upon them that they did not have the infrastructure to deal with.

Perhaps that's a business opportunity for somebody- a superannuation broker- just take details from the employer and cope with all the crap from the super companies.

Thirdly a lot of it will be lost anyway. The super company we deal with takes life insurance premiums out of contributions by default- usually without the knowledge of, let alone consent, of the people contributing. For a young person working part time, this can whittle down their small contributions to nothing. And people who are not permanent in Australia will probably just return to their countries without ever realising that they may be able to take it with them. I asked a super company last week what a returning OS employee should do about their super- they had to go away to find out the answer. (Apparently they claim back through ATO after they return home. I'll take that with a grain of salt).
 
Superannuation.

I know someone who got audited by ATO recently and to cut a long story short,they run a small company,husband and wife as directors.

Company didnt make much money last financial year so they didn't pay their own super.

ATO insisted they take out a rather large personal loan at a high interest rate and put it in their own super.

This is maddening :confused::confused:
 
While we're complaining about things that suck about being an employer.

Superannuation
You have to deal with a number of different superannuation companies since the government legislated free choice.
Perhaps that's a business opportunity for somebody- a superannuation broker- just take details from the employer and cope with all the crap from the super companies.

There are clearing house services available and the Government have a free online superannuation payments service for small businesses with 19 or less employees.
http://www.humanservices.gov.au/business/services/medicare/small-business-superannuation-clearing-house/?utm_id=9
 
I know someone who got audited by ATO recently and to cut a long story short,they run a small company,husband and wife as directors.

Company didnt make much money last financial year so they didn't pay their own super.

ATO insisted they take out a rather large personal loan at a high interest rate and put it in their own super.

I'm not sure I get this. Paying super on wages is a legal obligation. It's like saying 'well, we won't pay our income tax because the company didn't make much money this year.' Maybe it's not 'fair' from certain subjective points of view, the rules are known and clear.

In any case, wouldn't the owners be able to get around it by paying dividends instead of wages / fees to themselves? The problem seems to be more a lack of planning and ignorance of the rules because they aren't 'fair'.
 
There are clearing house services available and the Government have a free online superannuation payments service for small businesses with 19 or less employees.
http://www.humanservices.gov.au/business/services/medicare/small-business-superannuation-clearing-house/?utm_id=9
I didn't know that.

However our business would not have fitted into the criteria. I sent out 100 payment summaries for two shops- there was a lot of overlap. Most employees are part time.
 
I wonder how many businesses get away with doing the wrong thing assuming the employee will keep quiet rather than risk losing shifts?

A friend recently was called I to work for a three hour shift (casual). Before actually starting the shift but having travelled half an hour to get there, she was sent home. She SHOULD (I am told) be paid either two or (possibly a minimum) three hours. She will not complain as she needs the job. Same person used to be offered split shifts, three hours, a break, another three hours. The boss recorded it as a six hour shift to avoid paying a higher rate for the second shift (so I'm told).

I know someone who left his job at a large chain due to the fudging of the actual shifts in the books to avoid paying the young casuals "double time". He brought it up at a staff meeting with the owners and when they continued to fudge the shifts he decided to follow his principles and found another job.
 
I remember someone told me a significant difference between employee and contractor was that the contractor was liable to remedy defective work at their own expense.

ATO use to use the 80/20 rule.

they are both only one of the tests that AtO use,dont know about workcover.

the first one is the "results" test (this needs to be applied to EACH individual generating Personal Services Income.


n U nder your contract or arrangement, will your business only
receive payment when the work has been completed, that is,
after producing the contracted result?
n Does your business need to provide the equipment or tools
necessary to do the work?
n Do you have to rectify defects in the work, or is your business
liable for the cost of rectifying defects?

If you dont pass that, you go onto the 80/20 rule, (80% of your income is from one client only)
and then if you pass that you also need to pass one of the remaining 3 rules.

My husband just got caught out on this. He worked for about 12 months as a contractor, and then moved to permanent. unfortunately, this was his only contract in the 12 months, so he was a big fail on all the tests.... and has got a big tax bill to pay. The worst thing is that it limits the deductions you can make... so we also couldnt claim back the interest on our business debts........ GRRRR, that debt is going to be a ball around our neck for ever, it seems!

but I think that tax bill is for him only... I dont think the company he worked for will be responsible to pay anything. I guess it would be interesting to find out.
 

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I'm not sure I get this. Paying super on wages is a legal obligation. It's like saying 'well, we won't pay our income tax because the company didn't make much money this year.' Maybe it's not 'fair' from certain subjective points of view, the rules are known and clear.

In any case, wouldn't the owners be able to get around it by paying dividends instead of wages / fees to themselves? The problem seems to be more a lack of planning and ignorance of the rules because they aren't 'fair'.

Yep. A lot of sole director or mum and dad director pty ltd's still treat the business as though it is a sole trader, using company money as drawings, personal use of vehicles, not paying super etc, then run afoul of the ATO and cry ignorance.

The value of a pty ltd structure has diminished a lot in recent years, as they no longer really afford limited liability.
 
but I think that tax bill is for him only... I dont think the company he worked for will be responsible to pay anything. I guess it would be interesting to find out..

The employer could be liable for PAYE tax not paid, super not paid, workcover not paid correctly, and possibly fringe benefits tax.

I think there is going to be a huge rise in labour force businesses, good if you are in HR?
 
So how does this work for those who are "contracted" by Fed Govt? (thinking a very large number of people in Canberra - IT especially).
 
So how does this work for those who are "contracted" by Fed Govt? (thinking a very large number of people in Canberra - IT especially).

Yes this is going to be VERY interesting isn't it. I just had a friend ask me about taxi drivers... I reckon the taxi industry will be strong enough to get an exemption or else taxi fares will go through the roof.
 
The employer could be liable for PAYE tax not paid, super not paid, workcover not paid correctly, and possibly fringe benefits tax.

I think there is going to be a huge rise in labour force businesses, good if you are in HR?
Do you know if this is the case?
That is company's hiring company's and having to pay super,workcover Paye Tax,cause one company doesn't pass the test.:confused::confused:
 
Do you know if this is the case?
That is company's hiring company's and having to pay super,workcover Paye Tax,cause one company doesn't pass the test.:confused::confused:

According to my accountant, if you your contract is with a company... Eg you have a contract with "best painting pty ltd". They are a contractor as the company has the right to employ whom ever they see fit to do the job as contracted. (the best painting pry ltd. will the have the problem of proving their employees are employees or not). However if your company contracts to "bob brown" (regardless whether bob brown is a company, partnership or sole trader). Then the onus is on YOU to prove that Bob Brown is not an employee.

As you pointed out , on the workcover site there may be penalties for employing staff and not paying their entitlements.

Check with your accountant and maybe have a look at re-writing your contract to provide a service... Hahaha because of course we all have those. I guess we do now.

It is bloody hard isn't it... Even Master Builders have not been a huge help :(
Friend of mine is a "subby" for Q-build and the unions have been having discussions for sometime, but Q-Build will not convert them to employee status.
 
So what I am hearing you say is it cannot come back on me Pty Lty if I contract another Pty ltd?

I subcontracted for Qbuild for many years and also some councils (we are talking 20 years ago) and the councils back paid me super because i used their paint account to purchase chlorinated rubber as I use to sandblast and paint all the swimming pools for them.Qbuild on the other hand did not??
I was a sole trader then.
This will prove to be the biggest problem this country will have for some time.
No good putting your head in the sand,best to face it and ask questions now before it brings you down.I am sure they don't want us to have the answers so they can get us all down the track when they see fit.:mad:

According to my accountant, if you your contract is with a company... Eg you have a contract with "best painting pty ltd". They are a contractor as the company has the right to employ whom ever they see fit to do the job as contracted. (the best painting pry ltd. will the have the problem of proving their employees are employees or not). However if your company contracts to "bob brown" (regardless whether bob brown is a company, partnership or sole trader). Then the onus is on YOU to prove that Bob Brown is not an employee.

As you pointed out , on the workcover site there may be penalties for employing staff and not paying their entitlements.

Check with your accountant and maybe have a look at re-writing your contract to provide a service... Hahaha because of course we all have those. I guess we do now.

It is bloody hard isn't it... Even Master Builders have not been a huge help :(
Friend of mine is a "subby" for Q-build and the unions have been having discussions for sometime, but Q-Build will not convert them to employee status.
 
So what I am hearing you say is it cannot come back on me Pty Lty if I contract another Pty ltd?.

That is my accountants understanding. However he does feel there has to be a written contract of service document in place. He has suggested if I want more to find an HR lawyer. (that is when I spoke to master builders for a recommendation and they didn't have a clue :( )


Unfortunately, Most of our guys are one man shows (they may or may not be trusts/pty etc). Luckily it is pretty quite right now so I have some breathing space to get it all in place. (might see me on the factory floor making fly screens on the weekend though)
 
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