Australia: ATO definition of “contractors” vs. “employees”
ATO rulings on the classification of workers as employees or independent contractors
ATO rulings on the classification of workers as employees or independent contractors
The Australian Taxation Office (ATO) has finalized its rulings on the classification of workers as employees or independent contractors, following two landmark decisions in 2022. The rulings, TR 2023/4 and PCG 2023/2, provide guidance on determining an individual’s employment status and outline the ATO's approach to compliance.
- TR 2023/4 provides guidance for determining whether an individual is an “employee” under the Taxation Administration Act 1953 (TAA). The ruling emphasizes an objective assessment of the totality of the relationship between the parties, based on the terms of the written agreement. However, it is not binding on the ATO for classifying employees for superannuation purposes.
- PCG 2023/2 outlines the ATO’s approach to directing compliance resources to consider the correct classification of workers. It provides a risk assessment framework, classifying taxpayers as “very low,” “low,” “medium,” or “high” risk based on seven criteria.
For more information, contact a KPMG tax professional in Australia:
Nathan Hamilton | njhamilton@kpmg.com.au
Alston Kam | akam2@kpmg.com.au
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