If you engage a contractor for labour only, you may be liable to pay superannuation. This does not mean increasing the hourly rate you pay the contractor, it means you must pay the superannuation directly to that contractor’s super fund.
All construction companies must report contractor payments in July of each year and if it is found that superannuation payments have not been paid, the ATO has indicated they will seek out these companies who have not met the superannuation obligations.
How do you work out if your arrangement is that of a typical employee, or whether you have engaged a contractor? It is not a choice a business can make themselves, they must comply with the law. The ATO has an effective tool to determine if your arrangement is classified under the law as a contractor or employee relationship. If in doubt, or if you would like us to guide you through using this tool, please call us 1300 900 300