Contractors with a company and ABN who fall within the super regime

If you engage contractors it is critical you correctly classify who is an “independent contractor” and who is an “employee”. The classification can impact your superannuation guarantee (SG) obligations. Any shortfall (which could also include interest and penalties) may actually be your liability and not the contractor.

One factor that needs to be considered is whether the entity you are paying is the same as the entity you have a contractual relationship with. An administrative error could be a costly mistake to your business. You need to ensure these are the same.

There is sometimes a misconception that if a contractor has a company and an ABN there will definitely be no SG exposure. Unfortunately, this view is flawed.

Where a contractor provides a company name and ABN, but all future correspondence between the recruitment company and contractor is conducted in an individual’s name, there is a risk of a SG exposure. In Roy Morgan Research Pty Ltd v FC of T [2010] FCAFC 52; 2011 ATC ¶20-282, it was found that because the “individual” was selected to undertake the activity and the company featured only as the recipient of the fees, the contractor fell within the SG regime.