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Contractor Decision Tools

There are two tools that can be used to assist you in determining whether any payments made to contractors are liable for payroll tax:

1. Australian Taxation Office (ATO) Employee/Contractor Decision Tool
   (read more or access the ATO Tool)

2. RevenueSA Relevant Contracts Decision Tool
    (read more or access the RevenueSA Tool)

1. ATO Employee/Contractor Decision Tool

The ATO Employee/Contractor Decision Tool is designed to help you (as a payer) understand whether your individual workers are employees or contractors.

It is not designed for situations where you enter into an agreement with a company, partnership or trust for them to provide a worker, or obtain workers through an intermediary such as a labour hire firm, or where you are a labour hire firm.  In these situations the RevenueSA Contractor Decision Tool can be used as the basis for your determination.

You can access the ATO decision tool at the link below:

http://www.ato.gov.au/content/00095062.htm

ATO Employee/Contractor Decision Tool Outcome

If the ATO decision tool process leads to the answer that the:

  • worker concerned is an employee for ATO purposes you should;
    • include such payments for payroll tax purposes; and
    • the RevenueSA Contractor Decision tool is not required to be completed.
  • worker concerned is not an employee for ATO purposes, the RevenueSA Contractor Decision tool should also be completed to determine if the worker is not an employee for payroll tax purposes.

2.   RevenueSA Relevant Contracts Decision Tool

The RevenueSA Relevant Contracts Decision Tool is designed to help you understand whether any business agreements and any payments made to contracted workers are liable for payroll tax. Any payments you make to persons working under a relevant contract are taxable. 

For RevenueSA to exclude the contractors from the Contractor provisions it will need to be demonstrated to the Commissioner of State Taxation that the contractors conduct independent trades or businesses and have been consistently rendering such services to a significant range of unrelated clients.

Often a payer will engage an individual to perform the work, but in some cases;

  • the payer will enter into an agreement with a company, partnership or trust established by the worker for them to provide a worker (usually themselves), or
  • the payer may obtain workers through an intermediary such as a labour hire firm or employment agent.  If you engage all your contractors through a labour hire firm or an employment agent, the labour hire firm or the employment agent should be paying the payroll tax.

In all cases you are encouraged to complete the questionnaire. 

Once you have answered a series of questions, you will be able to print the decision for your records.

If your business is subject to audit and the contractor(s) engaged are reviewed this report will provide evidence of your attempt to address the issue and if properly and correctly undertaken will provide a basis for the remission of penalty and interest should the investigation lead to the alternative answer with respect to the contractor(s). 


For additional information please refer to Information Circular 005.


Any further questions regarding contractors can be directed through the voluntary disclosure process. Information regarding voluntary disclosures is available here.

A voluntary disclosure itself will result in zero penalty if made before an audit is commenced.

Click below to commence using the RevenueSA Relevant Contracts Decision Tool.
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