Payments to contractors are deemed wages and taxable in certain circumstances. The person or entity engaging the contractor is deemed to be an employer and is liable to payroll tax on those deemed wages.
Contractors include sub-contractors, consultants and outworkers. The provisions apply regardless of whether the contractor provides services via a company, trust, partnership or as a sole trader.
Several exemptions are allowed, and if any one of the exemptions applies to a particular contract, the payments are not taxable. People on-hired under an employment agency contract are subject to different provisions.
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