Why The Income Is Derived As A Contractor

1314 WordsSep 20, 20146 Pages
Introduction Toby is a highly competent pilot and has extensive amount of experience in flying aircrafts. He has established a separate entity for the purpose of operating his business operations with an objective of earning gains after covering the operational cost and training expenses of the business. Toby works on contract roles for multiple positions depending client requirements. Toby gets the compensation for his duties performed. Legislations applicable under this case In order to identify Toby’s relationship with the employer several aspects need to be verified to assess his tax implications. In order to consider whether the income is derived as a contractor we need to consider whether this income has been derived from business source. For this income needs to pass certain tests under ITAA 1997. First and the foremost requirement for this is that income should not be assessable as ordinary income under section 6-5 (Sadiq, 2012). If an employed person is earning an ordinary income can be derived by looking up various perspectives. It involves payroll obligations, rights for leave and superannuation contribution by employer. Its quite critical in certain situations to decide as tax law principles coincide with regulations of work under common law (Australian Taxation Office, 2013) In case of a self employed business, an individual is required to pay tax instalments. If an individual has an Australian business number (ABN), your employer might agree to
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