The Small Business Specialists
Phone: 13 12 49
What's the difference between an employee and a subcontractor?
It's important that you know the difference as you will have different obligations for each. The simplest way of working it out is by using the the Australian Taxation Office decision tool
If you answer yes to some or all of these statements it is likely that an individual is an employee. If they:
At its essence a subcontracting arrangement is a business-to-business relationship. You would hire a contractor who could be an individual, partnership, company or trust, to complete a certain task at a certain price.
The contractor has undertaken a contract for service, not a contract of service. A contractor is not an employee.
You should note that if a worker has an ABN, it doesn't automatically mean that they are contractors. You also need to consider other factors, in particular the degree of control exercised by the employer. In most cases, if you answer yes to the following statements the employee is a contractor:
For more information visit the ATO website