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The ATO has to make its position clear on the difference between employees and contractors because businesses remain uncertain, says CA ANZ.
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CA ANZ calls for clarity on employee-contractor distinction
15 March 2022
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It said doubts about hiring arrangements were set to play out across the courts following the recent move by Deliveroo to invoke a landmark High Court ruling to classify their riders as independent contractors rather than employees.
Uber will also make submissions on the ruling by 23 March as part of a Federal Court challenge that its drivers are employees.
The High Court ruling had supported the right of businesses to engage workers outside of minimum wage laws and employment regulations. However, the current ATO position adopts a more substantive approach in TR 2005/16.
CA ANZ tax leader Michael Croker said CA ANZ had asked the ATO whether it would be responding to the decision.
“They are reviewing it but indicated no plans to change existing guidance on the distinction: TR 2005/16,” Mr Croker said.
Accountants would need to be increasingly vigilant about how the issue would impact clients' hiring arrangements, said Mr Croker.
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He said law firms were busy contacting businesses suggesting labour worker contracts be reviewed in light of the High Court decision. There was evidence that some employers were starting to reconsider their hiring arrangements.
“The High Court decisions have triggered a lot of newsletters from law firms about the impact on the employee and contractor distinction, and some accountants are fielding calls from business clients keen to take a deeper look into their current hiring arrangements,” Mr Croker said.
CA ANZ said the ATO should publicly respond to these important decisions, even though they were unrelated to tax and super, urging caution. Mr Croker said the issues surrounding income tax, payroll tax and super issues were complex.
“CA ANZ would welcome a brief public statement from the ATO on whether the decisions impact the commissioner’s thinking in TR 2005/16 and urging employers to proceed cautiously from an income tax, FBT and superannuation perspective,” Mr Croker said.
“Speaking up now could avoid problems later.”
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