I often hear businesses questioning whether they should hire a worker as an “employee” or a “contractor”, and what the different implications are. Income Tax Assessment Acts 1936 and 1997 are both silent on the definition of an “employee”. To determine the nature of a relationship, the common law and ordinary meaning of an employee are applied. The general concept derived from the common law is that the relationship between an employer and employee is a contract of service, however, the association between an employer and an independent contractor is a contract forservice. An important distinction. The Commissioner of the Taxation Office explains in the Superannuation Guarantee Ruling SGR2005/1 that when an individual is considered to be an “employee” under s12 of the Superannuation Guarantee (Administration) Act 1992. SGR2005/1 discusses different measures the courts have considered...