Practice Update October 2025 – Camberwell Accountants

Employees incorrectly treated as independent contractors

The ATO is warning businesses that if they incorrectly treat an employee as an independent contractor, then they risk receiving penalties and charges, including:

• PAYG withholding penalty for failing to deduct tax from worker payments and send it to the ATO.
• Super guarantee charge (‘SGC’), which is more than the super that would have been paid if the worker was classified correctly. SGC consists of a super guarantee shortfall amount, nominal interest, and an administration fee.
• Additional SG penalties, including a penalty amount of up to 200% of the SGC.

Sham contracting may also contravene the Fair Work Act 2009. Courts can impose penalties against a business or person that incorrectly informsanemployeethattheyareanindependent contractor.

Click here for Practice Update September 2025