Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Report wrong to tax contractors as employees, says HIA

Download PDFDownload PDF

Report Wrong to Tax ^nntraptnre Q« Fmnlnvppe ^ays HIA.

Australia’s peak building industry association, HIA, has rejected claims of widespread tax evasion by building and construction contractors.

Dr Ron Silberberg, Managing Director of the HIA, said that the Report, by the Australian Centre for Industrial Relations Research and Training, had compared apples with oranges when using ABS statistics to compare the PAYE tax deductions of employees with the taxes paid by businesses.

Independent contractors in the building and construction industry are in business on their own account, with all that implies in terms of capital investment, responsibility to consumers, advertising, risk taking and competing with other businesses for a limited amount of work. Employees on the other hand are protected by the Award system and enterprise agreements, and did not put their businesses at risk

every time they took on a new contract. The study equated the “averaged contractor” with the “average employee”, without any appreciation of the quite different circumstances of those involved.

Claims in the paper that billions of dollars of tax were being evaded were also wrong. According to the ATO performance overview there has actually been an increase in revenue collected in the 97/98 year over the previous 96/97 year. Company collections have grown steadily and there has been an

increase in both the gross PAYE figures and in the same period the actual PPS has increased to $2524m from $2250m. HIA did not support tax evasion in any form, and had been working closely with the Australian Taxation Office on the cash economy. However, employees paid tax on their net income and businesses paid tax on their profits, and it was misleading to confuse the two.

The ABS figures were used to suggest that businesses should pay the same tax on their gross revenue as employees paid on their net income, and that it was somehow not legitimate to deduct the expenses of running the business (such as transport costs, bookkeeping and accountants fees, telephone bills, materials and job costs) before assessing income tax. Businesses in the building and construction industry were simply doing what every business in Australia did and was entitled to do, with the full knowledge and approval of the Australian Taxation Office. To suggest that this was tax evasion was completely absurd, Dr Silberberg said.

The fact that there was an indistinct legal line between common law employees and contractors was true, but it was not something the industry wanted, as it generated great uncertainty and risk for business. HIA had been working for some time to persuade governments to fix this problem by the use of the PAYE/PPS tax status of a person as a conclusive test for all purposes, as was done in Qld and NT for Workers Compensation purposes. HIA considered that the proposed new Australian Business Number (ABN) should be used to remove all doubt as to whether a person was an employee or an independent business, and called on all State Governments to use the ABN test in modifying their existing Workers Compensation, Payroll Tax, Long Service Leave and other relevant legislation.

3 December, 1998.____________________________________________________________________

For further information contact - Mr Glenn Simpson

Dr Ron Silberberg IR & Legal Services

Managing Director 04 1975 1180 (M)

02 62496366 (BH) 02 6245 1315 (BH)

Housing Industry Association Limited acn no oo4 sat 752

Northern Australia · Queensland · New South Wales · ACT/Southern New South Wales · Victoria · Tasmania · South Australia · Western Australia/Asia • Head Office Canberra ·