Contractor provisions

An independent contractor is an entity that agrees to produce a designated result for an agreed price. Any payments you make to contractors working after 1 July 2008 under a ‘relevant contract’ are taxable.

'Employee' and 'contractor' may have different meanings for payroll tax purposes from what you might expect.
Please review the meanings of employees and contractors to determine which definition applies to each employment arrangement. If the contractor has an employee/employer relationship with the principal, the contractor provisions will not apply.

As a guide to determine whether contractor provisions apply, you can:

Note: In viewing the decision tree, the person referred to as procuring a service under a contract is the principal contractor (PC) and the person supplying the service is referred to as an independent contractor (IC).

Begin at question 1

Question 1

Is the IC an employee at law or a company director of the PC?

Question 2

Is the IC in an employment agency relationship? Part 2 Div 1B 

s. 13B(5)

Question 3

Does the contract involve the supply of services, goods and/or the re-supply of goods in relation to the performance of work? Part 2 Div 1A 

Question 4

Is the work performed by the IC ancillary to the supply of goods by the IC? s.13B(2)(a)(i) 

Question 5

Is the work performed by the IC ancillary to the use of goods which are the property of the IC? s.13B(2)(a)(ii) 

Question 6

Is the service provided by the IC of a kind not ordinarily required by the PC and does the IC provide that kind of service to the public generally? s.13B(2)(b)(i) 

Question 7

Is the service provided by the IC ordinarily required by the PC for less than 180 days in a financial year? s.13B(2)(b)(ii) 

Question 8

Does the IC work 90 days or less in total in a financial year for the PC? s.13B(2)(b)(iii) 

Question 9

Has the Commissioner granted an order excluding the contract on the basis that the service provided by the IC is ordinarily provided by the IC to the public? s.13B(2)(b)(iv) 

Question 10

Does the IC (in its course of business) employ or contract 2 or more people to perform work in relation to the IC's supply of services or goods? s.13B(2)(c)(i) 

Question 11

If the IC is a partnership of people, does the IC (in its course of business) have 1 or more partners and 1 or more people employed or contracted by the IC perform work in relation to the supply of services or goods? s.13B(2)(c)(ii) 

Question 12

If the IC is a natural person, does the IC and 1 or more people employed or contracted by the IC (in its course of business) perform work in relation to the services or goods being supplied? s.13B(2)(c)(iii) 

Question 13

Is the service supplied by the IC primarily the transport of goods using a vehicle provided (e.g. owned) by the IC? s.13B(2)(d)(i) 

Question 14

Is the service provided by the IC solely the sale of insurance policies in which the insurer is the PC? s.13B(2)(d)(ii) 

Question 15

Is the service performed by the IC door-to-door sales of domestic goods for the PC? s.13B(2)(d)(iii) 

Message 16

Based on the information you provided, the payments are taxable wages less any exemptions and concessions.

Message 17

Based on the information you provided, the payments are not taxable wages.

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Last reviewed 4 August 2011