ATO Targets the Electrical and Communications Industry

In recent court cases, the Australian Tax Office (ATO) has emerged triumphant in its view that contractors employed (read ‘subbies’) were in fact employees, requiring the employer to pay, among other things, their super. So said the Australian Financial Review on 15 September 2010.

The ATO has warned it will focus on superannuation guarantee non-compliance having received over 17,000 complaints. The ATO is undertaking almost 1,000 compliance reviews with particular attention being paid to the electrical services industry.

This is an area of risk for businesses who employ subcontractors for flexibility and cost reduction. If someone gets it wrong it could potentially be a significant liability as the liability goes back to the inception of the relationship.

There are a number of factors, which must be addressed by a business when assessing whether the entity or person they are employing as a subcontractor is in fact so. Clarification is still required on some issues in legal areas relating to contractors including superannuation.

More clarification on the issue of 'Engaing a Subcontractor' and the obligations and requirements of both employees and employers (and how to identify either one) is available through the relevant link.

If you have any questions in regard to the above, NECA members can simply contact the NECA SA office on (08) 8272 2966.