Business rejoices as ATO, Fair Work told to lay off independent contractors

The business community has enthusiastically welcomed the news that Small Business Minister Bruce Billson has issued a warning to the Australian Tax Office to go easy on independent contractors and the self-employed.

The comments fulfil a hope within enterprise that Billson’s appointment will plug a knowledge gap of small business issues in government.

“This is very good progress,” said Peter Strong, chief executive of the Council of Small Business of Australia.

Ken Phillips, chief executive of the Independent Contractors Australia, told SmartCompany he was “absolutely delighted”.

“I’m delighted to have a government moving so quickly on these key issues – it’s really impressive,” he says, adding this announcement is yet more evidence the new government doesn’t simply think of small business as a token industry.

“Bruce Billson has small business as his only title, and they’ve moved his department to Treasury which gives him a real authority.

“This is quite a big shift and clear signal at the earliest stage of government that what they’ve said about small business being front and centre is being taken seriously.”

Billson told The Australian Financial Review the ATO, along with the construction watchdog and the Fair Work Ombudsman, have been told to take it easy on independent contractors.

“The issue is less about the law itself; it’s the way in which it has been administered,” he said.

“There are hundreds of thousands of these courageous, enterprising, self-motivated individuals who are making a contribution to the economy but suddenly found themselves in the Bermuda Triangle as contributors to the economy.”

Billson claimed the previous government had told these authorities to pressure contractors in order to move them towards employment agreements in which unions have more sway.

“We’ve seen independent contractors … in the clothing, textile and footwear area engaged to do contract work now being told they have to be engaged as employees to get minimum hours.”

Billson also mentioned a practice within the Tax Office to either refuse issuing of ABNs or withdraw ABNs from individuals.

“We’ve had examples raised with us that the ATO has denied a business an ABN for reasons that were not clear but there is no avenue to appeal.”

The ATO regularly reviews ABNs to determine if their holders are actually carrying on a business.

The Abbott government has pledged one million new jobs during its term – Ken Phillips says in order to reach that number, it needs to focus on small business.

“It’s good to see the small business is front and centre here,” he says.

Peter Strong says independent contractors need to be protected if the government wants to promote the virtues of being self-employed.

“This works hand-in-hand with fixing up contracting law,” he says. “The people who have been targeted have been victims, so you need to stop haranguing those who are doing the right thing.

“This is about people who are looking to increase their income and aren’t doing it in any way that could be considered dodgy.”

The Fair Work Ombudsman has been consistent in cracking down on the practice known as ‘sham contracting’, in which businesses classify employees as contractors in order to avoid paying them wages and entitlements.