A Coalition Government will not change the current personal service income laws as no case has been made or evidence provided to justify changes to force independent contractors and self employed people into more ‘employee-like’ arrangements.
The Rudd/Gillard Government, despite a pre-election promise to the Independent Contractors of Australia to make no changes to current independent contracting/self employed tax laws, instigated a review by the Board of Taxation at the urging of unions and sponsored changes through the Henry Review process that would wipe out many small businesses, create more red-tape, restrict deductions and discourage the use of contractors.
The Government has refused to re-affirm and honour its ‘no change’ promise and now claims that the laws they wouldn’t touch are “a threat to the integrity of the taxation system and a threat to working conditions of employees” (Senator Nick Sherry, 16 December 2009).
The Coalition believes that the existing personal services income laws support both independent contracting and self employed people and protect the tax system by applying proper criteria and tests to confirm the genuine nature of the contracting enterprise. Available evidence about the current law’s implementation simply highlights successful ATO compliance activity involving selected high-risk targets rather than making any meaningful case to change the law.
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