Now that the ETS is out of the immediate focus, something else has reared its ugly head. It's not new, but it is now being policed, by a government very short of cash and collecting it from everywhere! As a financial planner, now that it has been brought to my attention, I HAVE to tell you about it, in case you are affected.
Around a decade ago, the rules were changed around who could be an employee and who could not. The Personal Services legislation was introduced and in a nutshell, if you earned more than 80% of your income from one source, you were effectively "employed" by that income source. They were your employer. This affected a lot of people who took severance packages from employers and came back to work as sub-contractors in the same job, except they paid their own tax, didn't get super, long service leave and other employee benefits.
In 2006, the rules were tightened up. Not a lot more was done, not a huge amount of change was 'observable'. Not many took any notice.
Then the money got short in Canberra. This law is now being vigorously policed by what is effectively a hit squad from the ATO. If you are an employer, with a sub-contractor who would qualify as an employee, the consequences for you (and the employee) are fines with a MINIMUM of $33,000 flagfall, PLUS recouping the taxes that would have been paid, plus penalties, PLUS payment by the employer of the Superannuation Guarantee, and so on. These inspectors can earn their annual salary every week, just in fines, by hitting just one small business. The other 50 weeks are the cream for the government!
Here's my suggestion: If this is you, either as a sub-contractor, or an employer/contractor, and you have any doubts, make a call to your accountant before you click off this page! At the very least, it will cost you a phonecall and give you peace of mind. At best, it may allow you to sidestep the enormous penalties this bankrupt government is going to great lengths to collect!
Where else can you think of that the fine for an individual is a minimum of $33,000 - first offense! And ignorance, an innocent mistake, or acting on poor advice is no defence! They just want your money. MAKE THE CALL!
If in doubt, contact me also and I'll refer you through to experts in the field - I'm not the expert here, but I am aware of it and understand how critically important this could be to a small business that is maybe having a tough time...