What is a Contractor?
A contractor in Real Estate is exactly the same as a plumbing or electrical contractor – they are a person or entity that contracts themselves to someone else for a fee.
The characteristics that make up a contractor are as follows:-
- The person you engage has a Company
- The person is not an Apprentice or Trainee
- The person has an ABN
- The worker is allowed to have someone else do the work for them, and this forms part of the agreement.
- They are free to work for another Company
- Supply your own equipment and maintain your own insurances
The ATO has a Tool that can help you determine whether you are in fact an employee or a contractor, visit https://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/
The ATO is very strict on this as many people who think they have a contractor arrangement actually don’t.
Employers face penalties for what’s known as sham contracting:-
- A monetary penalty for failing to meet PAYG withholding requirements
- A super guarantee charge for failing to make the correct superannuation contributions, which consists of the shortfall (up-to-date payments), the interest on the shortfall, and an administrative fee.
There are also risks for the employee/sham contractor in the fact that you usually sign an agreement that takes away the protection of the award system – meaning no holiday or sick leave and very little help to recover monies from any form of dispute other than costly legal action.
The negative aspects aside, this is the way of the future and given the right advice from an employment expert, both the employer and contractor can enjoy financial benefits from the arrangement.
The Contractor is able to invoice the Real Estate Company for services rendered and the company enjoys the benefits of reduced costs by not having employees.
To be a contractor or conjunctional agent you must hold a Full Real Estate Licence
For more information contact Complete Property Training on ph 1300 281 289 we are only too happy to help