What you need to know
It's essential to find out what your tax and super obligations will be when you start work as an independent contractor. Knowing these obligations from the start can save you time, money and stress later on.
As an independent contractor, you can be:
- an individual (sole trader) or
- working in your own company, partnership, or trust.
You might call yourself an independent contractor, sub-contractor or a 'subbie'.
As an independent contractor, you're starting or running your own business, therefore you:
- need an Australian business number (ABN)
- need to choose a business structure
- may need other business tax registrations, such as GST
- need to pay tax and super
- need to know if your income is subject to the rules for personal services income
- are not entitled to paid leave if you get sick or injured
- may have to pay the cost to fix anything you damage in the course of your work
- may also have to pay the costs incurred by someone else if you cause an accident on someone else's property.
If you're an independent contractor in the building and construction industry, you must also lodge a taxable payments annual report (TPAR).
Check if you are an employee or independent contractor
Independent contractors have different tax and super obligations to employees. Use, employee or independent contractor – what's the difference to check whether you should be an employee or independent contractor.
You can also review common myths about being an independent contractor which may help you work out your work type and position.