Contractors vs Employees


If you are a contractor, make sure you are meeting the ATO’s requirements around being a contractor, as opposed to an employee, you need to know the difference between an employee and a contractor.
Your tax, super and other obligations will vary depending on whether your worker is an employee or contractor.
If your worker is an employee, you’ll need to:
  • withhold tax from their wages, report and pay the withheld amounts to the ATO
  • pay super, at least quarterly, for eligible employees
  • Report and pay fringe benefi ts tax (FBT) if you provide your employee with fringe benefits

If your worker is a contractor:

  • they generally look after their own tax obligations, so you don’t have to withhold tax from payments to them unless they don’t quote their ABN to you, or you have a voluntary agreement with them to withhold tax from their payments
  • you may still have to pay super for individual contractors if the contract is principally for their labour
  • you don’t have FBT obligations

Any of the following types of workers are always treated as employees:

  • apprentices
  • trainees
  • laborers
  • Trades assistants Companies, trusts and partnerships are always contractors.
contractors v employees table
contractors v employees