Contractor or Employee?

It is sometimes difficult to distinguish between a genuine contractor relationship and an employee.

The acid test is this: if you determine what work is to be done, when it is to be done and how it should be done, then you are an employer and must deduct tax etc as you would for any other employee.

In general terms, a contractor could be a painter engaged to repaint a building, or a plumber engaged to repair a tap - apart from being shown the job they are left to their own devices and submit a GST tax invoice or bill in due course. A contractor can employ other staff to assist (they would be the employer for those staff) or engage other sub-contractors. A contractor will typically be available for other clients (not just your company).

An employee on the other hand is expected to be available for work, starts and finishes between usual hours of business and is directed in their duties.

You should contact the Department of Labour to determine the true nature of the engagement if you are even slightly unsure.

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