Start-ups that hire independent contractors have been urged to be aware of superannuation payment rules in the wake of several recent cases.
Action bought by the Australian Tax Office in the Administrative Appeals Tribunal and the Federal Court was successful in confirming that employers had to pay super for contractors.
The cases, brought against companies including garment maker John Brilliant and pollster Roy Morgan Research, carry the threat of retrospective super payments to contractors for the length of their employment.
While businesses are required to pay super for employees, some contractors are exempt. However, small firms have been urged to be sure of their obligations.
Marc Peskett, partner of accountancy firm MPR, says: “These cases have confirmed what the law is and shows that the tax office is prepared to take people on.”
“Some people aren’t aware of what this law is but some employers are deliberately structuring themselves to avoid super payments. Just because you hire a contractor, it doesn’t mean you don’t have super obligations.”
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“Start-ups need to be aware of this as they are more likely to use contractors rather than full-time staff. You should assume that super is included unless it’s excluded under the rules.”
“The payment rate should include the super paid, so no-one is caught paying a contractor and then having 9% charged on top. It will help you protect yourself. You should speak to your advisor or check on the ATO website to be clear about the rules.”
Tomorrow, StartupSmart.com.au will look at this issue in depth, with expert analysis on how start-ups can avoid falling foul of the contractor super rules.