In order to help meet your tax and super obligations when hiring a new worker, we have put together a checklist for your consideration:

Is the worker legal?
Before you employ anyone you must ensure they are legally allowed to work in Australia. They must be Australian citizens, permanent residents or non-citizens with Australian visas allowing them to work.

Distinguish between employee versus contractor
You need to determine whether the worker is an employee or a contractor, as your tax and super obligations are different for the two. For more information on how to distinguish between the two please read our article ‘How to distinguish between contractors and employees?’

Pay As You Go (PAYG) withholding
You will need to withhold tax from: – all employees; – contractors who have a voluntary agreement with you; and – contractors who do not provide you with an ABN.

Superannuation
You need to pay superannuation for: – Employees; and – Contractors that you are paying primarily for their labour.A default fund needs to be established and you should also have knowledge of super choice arrangements.

Fringe Benefits Tax (FBT)
When you provide fringe benefits to a contractor (or their associate) you will generally not have to pay FBT unless the fringe benefit is provided by an associate of yours or a third party under an arrangement.You may have to pay FBT when you provide fringe benefits such a purchase of a motor vehicle to your employees (or their associate).

What expenses can you claim?
Most of the expenses you incur as a result of engaging workers i.e. advertisements costs, recruitment agency fees are eligible tax deductions.

These are just some of the issues to consider when hiring a worker. If you are unsure or need more information about your taxation and superannuation responsibilities as an employer, please contact us on 03 9081 0400.