My husband should be treated as an employee , he is employed as a subcontractor , he is carpenter . His boss has not paid into super or PAYG. So he not paid tax this year. He works full time and on an hourly rate , uses his own car and tools for the job- he invoices his boss weekly and provides an ABN . What should he do.
Best option is to identify to the boss what his obligations are - even under subcontractor arrangements, can often still be required to cover Super and Workers Comp Insurance. ATO has a great decision tool on their website. I'd recommend you have a look at this, maybe print/email the results to the boss so he knows where you are coming from.
As for PAYG(W) - nothing illegal under the current arrangement. You can ask for a voluntary withholding amount, generally 20% of income, to be dealt with by the business, otherwise liaise with your accountant to work out a reasonable amount/percentage to put away (when done well, you can benefit from having the governments money working for you).
If you want to rock the boat, you can mention to the ATO about the super - they are happy to audit the business and charge the superannuation accordingly. Same can be done with WorkSafe for workers comp insurance.
Note it is a small world out there, only use as a last resort.
This is a big area for the ATO at present. The building industry has been the case in point for subcontractors being incorrectly dealt with over the years, with the government keen to reduce the mistakes and penalise those that skirt the issue. Unfortunately many small businesses have gone bust as a result of this issue.
the building game is awash with people who dont like paying super, or workers comp, or PAYG W either for that matter.
You hubbys boss will almost certinaly get slugged with super and workers comp if he gets looked at by ATO and workers comp, however I beleive the PAYG W is going to very difficult to get around.
If your hubby has given the boss invoices, even if the invoices just say "40 hours at $50/hour"or something like that, then the boss has paid him that amount.....then for TAX purposes his income is business income and he will be taxed on it accordingly......which means that you guys are getting a tax bill no matter what happens.
best thing you CAN do is get in front of a GOOD tax agent who can help you minimise the pain of paying tax on busines income.
you also need to make decisions about whether you hate your hubbys boss enough to dob him in for avoiding super and workers comp.....which he clearly is....and deserves everything he gets. But that is often a problem because as soon as he get wind that you have dobbed him in you will probably find yourself looking for another gig as a builder......
and dont forget that its your retirement nest egg he is NOT paying into......and when he has retired to Hobart and living the life of Reilly he wont lay awake at night wondering if you guys have enough to retire on. this is something else you should discuss with your accountant.
Soooo get yourself a GOOD QUALIFIED Accountant who is CPA or CA qualified and knows what he is talking about with super and workers comp....and business returns.
And also talk to him/her about what BUSINESS STRUCTURE is best suited to you specific circumstances.......maybe sole trader is not the best option for you either.....
As a first step I would recommend that you look at the fairwork.gov.au website page on the difference between contractors and employees https://www.fairwork.gov.au/find-help-for/independent-contractors. There is, among other things, a fact sheet to help you at https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/rights-and-obligations/independent-contractors-and-employees
You should then look at the business.gov.au website for further information at https://www.business.gov.au/people/contractors/independent-contractors.
Once you have got a better idea of the basic information you should consult with the Fair Work Ombudsman or with a lawyer.
As from 1 January 2010, the Tasmanian Government's powers for industrial relations were transferred to the Commonwealth. All workplaces in the private sector, who up until this time were in the state system (sole traders, partnerships etc), moved into the national scheme (Fair Work Act 2009). So a lawyer in Queensland, like me, is dealing with the same laws that you have in Tasmania.