You must pay super contributions to a complying super fund for all eligible employees by the quarterly deadlines. These contributions are in addition to the employees’ salaries and wages, and must be calculated based on ordinary time earnings.
You also need to pay super contributions for contractors you pay under a contract for labour, because they are considered employees for the purpose of super guarantee. This includes contractors who quote an Australian business number (ABN).
You are generally only entitled to an ABN if you are carrying on an enterprise in Australia or have a clear business intent.
Contractors differ from employees and holding an ABN means that you:
- have entered the business tax system and are now responsible for reporting your income and paying your tax and super entitlements
- may be responsible for your own workers compensation.
Just having an ABN doesn’t make you a contractor. Contractors are paid for the result they achieve rather than the time they work. Contractors do not normally have to work during hours set by an agreement or award and the employer does not provide them with the tools to do their work or direct their work.
If you are an employee, then your employer must withhold tax from any salary, wages, commissions, bonuses or allowances they pay you.