ABN vs TFN.
The Differences between Employees and Contractors.
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⚠️ All the following points are general rules.
It may vary depending on the specific agreement you have with your employer.
♠ For Spades policies consult your allocator ♠
▶ You are a contractor.
It is like you're running your own business. You do not have employee rights/benefits.
▶ You should manage your own Tax.
Your employer (or client) does not hold any tax. At the end of the financial year, you should declare your income, deduct expenses and pay taxes.
▶ You should manage your own Super.
Your employer (or client) does not make contributions to your Superfund.
You must manage the contributions yourself.
▶ You should have your own insurance.
In case you get hurt you may have to cover your own hospital costs. If damages are caused due to your negligence you may have to pay for it.
▶ You are responsible for your own work.
The outcomes of your job as well as your performance are your responsibility.
▶ You should be paid more than an employee.
Naturally, the pay rates for contractors (ABN Workers) are higher since you should be compensated for all the items above.
Reflect it this is a good option for you.
▶ You are an employee.
You may or may not have benefits considered if you're hired as a full-time, part-time or casual.
♠ Spades only first hires casual employees. You may get promoted to part-time or full-time later on.
▶ Your employer covers your Tax.
Every payday you will receive a payslip that lays out how much you made and how much is withheld as taxes. At the end of the financial year, you may claim part or all of your taxes back.
▶ Your employer contributes to your Super.
In every payment, there should be contributions to your retirement Superannuation fund. If you don't have one they should create one for you.
This info should be on your payslip.
▶ You're insured by your employer.
Your employer should have Public Liability and Workers Compensation insurance. These should cover any work related accidents.
▶ Your work is your employer's responsibility.
Your employer, as a company, is responsible for the outcome of your work. Not you personally.
Why contracts are important?
Firstly, contracts allow insurers to properly assess the risk associated with a company, which often results in lower insurance premiums.
For contractors (ABN), this means that they can receive higher pay rates per job or per hour.
For employees (TFN), it means that they are covered for any possible circumstances that occur on-site.
Having a contract in place also helps to prevent issues with ATO, fair work and Immigration in the future.
👉 Contractors (ABN), can claim their tools and PPE on their tax, and keep track of their own insurance, worked hours and visas.
👉 For employees (TFN), it demonstrates that the employer is serious and committed to paying them for their work as per the agreement.
In summary, having a contract in place provides security and clarity for all parties involved in a work arrangement.