Tax question?if you hire a person to do a job for you and you set hourly rate?

Question

for example 50 an hour...what happens if that person 1- has ABN number 2- does not ABN number...3- does not do the job for you if you want to ask him/her to pay tax and just wants the whole 50 an hour and you are frustrated to hire someone?I give you an example: you are after a nanny and after searching a lot you find someone who is good, reliable,experienced and commited and you definitely want that person to come to your house but she wants $15 an hour without having to pay tax...if you ask her ABN or mention tax to her she will not come or she will ask you 20 or more per hour....so what would you do?

Answer 1

There are special rules if a so called "independent contractor" derives most of their income (over 80%, I think) from one source.  They will be treated as an employee, which means the employer and employee have the obligations that attach to those statuses.

Quite frankly, I think you are mad if you are relying on Internet advice from people about whose expertise you know nothing.  Spend a buck or three and sit down with an accountant who will give proper advice on which you can rely.

Answer 2

You should not employ her.

An ABN number has nothing to do with income (PAYG) tax as you would already know from the numerous answers you've received to your numerous questions.

No one likes paying tax, but everyone should pay their share. Every person who doesn't pay their fair share makes tax more expensive for everyone else in the long run and reduces the services our governments are able to provide. This person may also be receiving Centrelink benefits and doesn't want them to know she is earning money other than her Centrelink benefit and that's even worse than not paying tax.

Tax evasion is stealing from the taxpayers of Australia and people who think one form of stealing is OK, tend to have the same attitude to other forms of stealing.

Are you sure you want a dishonest person working for you?

Answer 3

You could pay her the $15 per hour, and let the Tax Office know.

That way you get the work done for the price you agree to, and they end up paying the tax later on.

If everyone pays tax correctly, the tax rates for all of us could come down even further than they have.

Answer 4

Don't employ her, if she is not happy with what you have offered her.

If she has an ABN and she is not willing to supply it to you and if she does not want you to take tax, then she obviously wants to rip-off the taxpayer, by  not paying her due to the country. Imagine if everybody in every company paid no personal tax company tax, or GST.

Australian Business Numbers are only relevant, if she has registered as a business.

That means that she must supply invoices, including disclosing the GST and also submit the GST component, to the ATO, periodically.

Other than that, PAYG is the norm and you are responsible, as her employer for taking it out. That also makes you responsible for submitting it to the tax office.

A good idea would be to speak  to the ATO, or your tax agent, on a hypothetical basis to find out what your responsibilities (and hers) are, regarding taxes.

If you employ her on a tax -free basis, then you may well have problems; if one wrong person says one wrong thing, to the wrong people.

Tax wars are not worth it. You have to pay the tax, pay fines and could also end up being gaoled, depending on the judge and the severity.