When you hire a worker, you must check if they are an employee or a contractor.
Why is the difference so important?Why is it so important to determine whether the person that you are hiring is an employee or a contractor?
The test for a contractor is a little more difficult. Unfortunately, it is not as simple as saying "they call themselves a contractor and we hired them under a contractor agreement", or "they have their own business and ABN".
In determining whether the person you have hired is genuinely a contractor and not an employee, you need to make an assessment in light of all of the circumstances, taking into consideration the decision matrix provided by the ATO including:
Sham contracting can arise in a range of circumstances including: