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Tax time can be confusing. It makes you re-think things you know and face things that you’ve got no idea about. It’s also important that you get it right first time, to avoid penalties or delays later on.
One of the major ways that your tax return will vary depends on if you are a contractor or an employee. You should know which you are, and which return type you are filing.
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An employee is someone who works for a business to perform a specific duty in an open ended, permanent contract. The employee is expected to complete their role and in return their employer will take care of all of the practicalities of employment, including superannuation, payroll tax, sickness and annual leave.
Contractors are typically self employed people engaged by a company or individual for a specific task, which they often do for an agreed price and with a pre-arranged time frame. Contractors don’t work for anyone exclusively, but rather work for themselves and as such are responsible for a lot of the duties that an employee may not have.
Businesses employees complete tasks that are open ended and constantly required for the running and growth of their business. Most workers are employees of their business. They typically have set hours, set salaries and set bonuses built into their contract. They tend to get superannuation, leave hours and more stability with their contract.
Business use contractors to perform tasks that are only required seasonally or for short periods of time. For example, if a window broke, it would make more sense for a business to contract a glazer to fix the single window, rather than employing one. Businesses may use contractors to cover particularly busy periods, such as shops over Christmas or holidays perks in the summer. A lot of businesses have temporary projects where it would be a lot more cost efficient to use a one-off, contractor.
It isn’t really a case of which is better, or which is worse, it’s usually more a case of which works better for the individual. Some people enjoy the routine and regularity of having employment, while some people prefer the freedom and variety of being self employed.
It’s also important to consider where you are in your life, for example, if you don’t have a family then you may prefer and have the time to be an employee, whereas if you have a young family or other commitments, you may prefer the flexibility of being a contractor.
In summary, it isn’t really about which is better or which is worse, it is more about the type that works better for you and for your industry. Both have positives and negatives, and while one might suit one personality type, others will prefer the other.
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Hello, I would like to ask you, if I can work in Australia like a contractor when I’m not of Australian nationality, I mean can I use the platforms for contractors like freelance-market, is it not possible?
Hi Olca,
Thanks for your inquiry.
Yes, you can work in Australia as a Contractor even if you have different nationality. It also depends with the company on where you will apply for on what will be the requirements or eligibility criteria on the job position.
Best regards,
Rench