The High Court has delivered two important decisions concerning independent contractors. The Court held that where a written agreement governs the relationship between the parties, generally that agreement will determine whether a person is an employee or independent contractor. 

Two cases were heard together by the High Court and judgments handed down on the same day.  The High Court’s approach provides greater certainty for businesses who have properly recorded their independent contractor relationships in written contracts that accurately reflect the nature of the relationship.

The decisions are a significant departure from the approach previously applied by Australian courts which involved an extensive assessment of the actual circumstances of the working relationship between the parties to determine (not just their contract) whether or not an employment relationship exists.

What should employers do next?

The High Court decisions in Jamsek and Personnel Contracting mean that in general, the existence of an employment or contractor relationship depends on an assessment of the totality of the parties’ relationship based on their contractual terms and conditions.  The previous approach of considering the subsequent conduct of the parties as well as their contract when making this assessment is no longer correct.

The key messages for principals when engaging contractors are: 

  1. The terms of engagement should be comprehensively set out in a written agreement between the parties.  If key aspects of the relationship are not regulated by the agreement, this could  allow a contractor to challenge the contract and a court to examine the conduct of the parties.
  2. Agreements should prescribe the sole methods by which they are varied (i.e., by written agreement of the parties, not their conduct) and provide that the written agreement constitutes their entire agreement.
  3. Documents relating to the recruitment of contractors (such as advertisements and description of proposed services) could be examined to ascertain the intention of the parties when entering into the contract and should be consistent with a contractor relationship; and
  4. Review and update their contractor agreements to ensure the legal rights, duties and obligations created between the parties are consistent with the relationship of an independent contractor and principal.

To find out more about the cases visit Jamsek and Personnel Contracting

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Work related expense deductions

   Posted by Admin

Home office expenses

Expenses relating to the use or ownership of a home are domestic and are not deductible. However, in specific cases some expenses may be allowed as a deduction if there is a sufficient connection with your employment activities.

If you work from home, you may be entitled to claim some running expenses of a home office. This may include heating, cooling, lighting, cleaning and depreciation of home office furniture and equipment. You cannot claim your home occupancy expenses such as rent, mortgage interest, water, and rates.

Example - working from home

Calvin is employed as a software developer by ABC Pty Ltd, a company based in the Melbourne CBD. Calvin lives in a rented property in Geelong and wants to limit his need to commute to the office in the Melbourne CBD. His employer gives him permission to work frequently from home, but he needs to come into the office for team meetings and on other days as required.

Calvin sets up a spare room as his work office and he doesn't use it for any other purpose. Calvin would be able to claim running expenses in respect of his home office but would not be able to claim any portion of his rent as it is a cost of maintaining a place to live and domestic in nature (that is, an occupancy expense).

If claiming for a home office, you can only claim the additional running expenses incurred as a result of working from home.

Example - additional running expenses

Ian occasionally works from home. As Ian has a dedicated room to work from, he is entitled to claim the additional running expenses that he incurs as a result of working from home during the day. This would include the cost of lighting, heating, and cooling the room he works in for the time he spends working there.

If Ian had instead worked from his dining room or living room when other family members were present, he would not be entitled to claim a deduction for the running expenses such as the cost of lighting or heating and cooling as he incurs no additional cost as result of working from home in those circumstances.

Running expenses

If you are entitled to claim running expenses, you can claim the work-related portion of the following expenses:

  • heating, cooling, and lighting

  • cleaning costs

  • computer consumables (such as printer paper and ink), and stationery

  • home office equipment such as computers, printers, furniture, and telephones - for these you can claim the

      o  the full cost for items up to $300

      o  decline in value for items over $300.

You can claim running expenses either at the fixed rate or as actual expenses. In response to the increased number of employees working at home due to COVID-19, a new temporary method, called the shortcut method has also been introduced.

Shortcut method

The shortcut method is a deduction of 80 cents per hour worked from home. This method is temporary and will only be available to use from 1 March 2020 to 30 September 2020.

To claim the shortcut method, you must:

  • be working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls

  • have incurred additional running expenses as a result of working from home.

You don't have to have a separate or dedicated area of your home set aside to work from, such as a private study.

The shortcut method covers all additional deductible running expenses, including decline in value of electronic devices. If you use this method, you can't claim any other expenses for working from home for that period.

When you are calculating the number of hours you worked from home, you need to exclude any time you took a break from working, for example the time you spent to stop and eat your lunch or to assist your children with home schooling.

You must keep a record of the number of hours you have worked from home. This could be a:

  • timesheet

  • roster

  • diary, or

  • similar document that sets out the hours you worked.

If you use the shortcut method to claim a deduction in your tax return, include the amount at the other work-related expenses question in your tax return and include 'COVID-hourly rate' as the description.

For employees guide for further deduction, go to

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About Directors ID

   Posted by Admin

A director identification number (director ID) is a unique identifier you will keep forever. It will help to prevent the use of false or fraudulent director identities.
How director ID works
A director ID is a 15-digit identifier given to a director (or someone who intends to become a director) who has verified their identity with us.
A director ID:
  •    starts with 036, which is the 3-digit country code for Australia under International Standard ISO 3166
  •    ends with an 11-digit number and one ‘check’ digit for error detection.
Directors must to apply for their own director ID and It’s free to apply.
Directors will only ever have one director ID. They'll keep it forever even if they:
  •    change companies
  •    stop being a director
  •    change their name
  •    move interstate or overseas.
Why you need a director ID
Shareholders, employees, creditors, consumers, external administrators and regulators are entitled to know the names and certain details of the directors of a company.
All directors are required by law to verify their identity with us before receiving a director ID. This is important because it will help to:
  •    prevent the use of false or fraudulent director identities
  •    make it easier for external administrators and regulators to trace directors’ relationships with companies over time
  •    identify and eliminate director involvement in unlawful activity, such as illegal phoenix activity.
Illegal phoenix activity is when a company is liquidated, wound up or abandoned to avoid paying its debts. A new company is then started to continue the same business activities without the debt. When this happens:
  •    employees miss out on wages, superannuation and entitlements
  •    suppliers or sub-contractors are left unpaid
  •    other businesses are put at a competitive disadvantage
  •    the community misses out on revenue that could have contributed to community services.

Who needs to apply and when
You need a director ID if you’re an eligible officer of:
  •    a company, registered Australian body, or registered foreign company under the Corporations Act 2001 (Corporations Act)
  •    an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).
An eligible officer is a person who is appointed as either:
  •    a director
  •    an alternate director who is acting in that capacity.
You will only ever need one director ID. You don’t have to apply for another one if you become a director of other companies or corporations.
You must apply for your own director ID to verify your identity. No one can apply on your behalf.
People who don’t need to apply
You don't need a director ID if you're either:
  •    a company secretary but not a director
  •    acting as an external administrator of a company
  •    running a business as a sole trader or partnership
  •    referred to as a ‘director’ in your job title but have not been appointed as a director under the Corporations Act or the CATSI Act
  •    a director of a registered charity with an organisation type that is not registered with ASIC or ORIC to operate throughout Australia
  •    an officer of an unincorporated association, cooperative or incorporated association established under state or territory legislation, unless the organisation is also a registered Australian body.


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WA man jailed for false GST claims

   Posted by Admin
A Western Australian man has been sentenced in the Perth District Court to three years jail after pleading guilty to dishonestly obtaining and attempting to obtain a financial advantage by deception. The man attempted to obtain almost $230,000 in fraudulent GST refunds he was not entitled to. In addition to his criminal conviction and jail term, he was ordered to repay $187,486 in reparations. The ATO welcomed the sentence handed down, saying among other things, that “[t]his was not a careless or accidental mistake; this was a deliberate attempt to gain money he was not entitled to by repeatedly reporting sales and claiming GST refunds from a business that wasn’t trading.”
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The Federal Court has ruled that certain assets of two undischarged bankrupts were not held in their SMSF and were therefore divisible among the creditors of their bankrupt estates. They sought to rely on s 116(2)(d)(iii)(A) of the Bankruptcy Act 1966 which provides an exception to assets available to creditors for "the interest of the bankrupt in...a regulated superannuation fund". However, the court determined that they failed to show that the disputed assets were held on the terms of the SMSF for the beneficiaries of the SMSF. (Frigger v Trenfield (No 10) [2021] FCA 1500, 1 December 2021.) Comment: This case therefore provides some important lessons for SMSF trustees on the importance of keeping records of SMSF assets and maintaining compliance for the fund.

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