Taken from ATO publication  Workforce education news Issue 6 August 2011

Some advice for employers
The ATO is checking that employers are treating their workers correctly for tax and super purposes. Our field officers continue to find employers who:

  • deliberately try to avoid their responsibilities by incorrectly treating their employees as
    contractors, or
  • are pressured by employees to incorrectly engage them as contractors.

Whatever the reason for an invalid contracting arrangement, employers may face penalties for failing to comply with their employer obligations. These may include:

  • penalties for failing to withhold under pay as you go, and
  • interest from the date the amount should have been withheld and paid to the ATO.

The ATO is also finding that some employers are not paying super guarantee contributions for their workers. Employers who do not meet the super guarantee requirements will pay the super guarantee charge. Unlike super guarantee contributions, the charge is not tax deductible.

Employers can use the Employee/contractor decision tool to understand whether individual workers are employees or contractors in order to comply with Commonwealth tax and superannuation obligations.