Contractor vs Employee Calculator: ATO Factors

Using the Employee vs Contractor Decision Tool

This employee vs contractor decision tool identifies factors to assess in a directly engaged individual’s working arrangement. It keeps conflicting factors visible and lists unanswered questions. The result is a screening aid, with no legal classification or weighted score.

Use the contract and agreed changes when answering. Record what happens in practice too, because the applicable employment test can require it. An Australian Business Number (ABN), an invoice or a contractor label cannot settle the relationship.

The screen covers direct engagements of individuals and sole traders. A contract with a company, partnership, trust or labour-hire business requires separate assessment. The answers run locally in your browser and are not uploaded.

Tax, Super and Employment Tests

Tax, super and employment law can require different assessments of the same arrangement. Review each obligation separately before setting up payroll.

For tax, the ATO’s TR 2023/4 examines the rights and obligations under the contract as a whole. Comprehensive written terms have a different evidentiary role from incomplete or disputed terms. Read the ATO’s worker-classification ruling when applying that assessment.

For super, a contractor can fall within an extended definition of employee. Personal service under a contract mainly for labour requires separate review. The screen flags time-based pay, mainly labour and no delegation for that review. Other answers do not establish an exemption. The government’s contractor super guidance explains the labour conditions and separate performer rules.

For Fair Work, first identify which employment test covers the business and the period of work. Constitutionally covered businesses generally use the whole of relationship test for work from 26 August 2024. It considers the agreement and its practical operation. Earlier work, eligible opt-outs and state-referred businesses can require the start of relationship test. State workplace systems need their own assessment.

The factors overlap with those considered in an ATO employee or contractor assessment. This page is an independent screen, not an ATO calculator or ruling. It does not compare employee salary packages with contractor rates. Payroll tax, workers compensation and other obligations need their own checks.

Reviewing a Mixed Result

The fictional example has a directly engaged sole trader with complete written terms. The hiring business directs the work and promises ongoing hours, paid by time. The worker can genuinely subcontract, supplies substantial equipment and pays to fix defective work. Payment is mainly for labour.

Those answers produce “Mixed factors”. Control, ongoing work and time-based payment point towards employment. Delegation, equipment and rectification risk point towards an independent business. The screen does not count one group against the other.

Confirm that the subcontracting right is genuine and read it with the rest of the agreement. Check whether the written terms changed, identify the applicable Fair Work test and assess super separately. If a fact is missing, select “Not sure” to add it to the unresolved list. Refer a disputed or unclear arrangement for legal advice before relying on a classification.