There are those who profit from the current system - in their recent submission to a review of subcontractor tax provisions the Independent Contractors Association state:
These laws should now be left as they are and allowed to do their job. We do not see any reason for the laws to be changed.
The attractiveness of the current system is not hard to fathom, dodgy employers can halve their wages bill, avoid every legal entitlement that accrues to employees and have decent law abiding taxpayers foot the bill for their illegal activities. The gateway to this rorters' Shangri-la is available at www.ato.gov.au where an easily defrauded online survey gets you an ABN over the internet.
Imagine if welfare benefits were available this easily, the conservative media would be baying for blood and demanding changes, instead this dirty secret eats away at the tax base and costs the Australian community many hundreds of millions of dollars per year.
The Australian Bureau of Statistics latest survey of independent contractors reveals some startling statistics showing the systematic failure of the 2000 ABN tax laws. Of the 967,100 so called independent contractors;
• 115,000 (12%) were classified as labourers - the Tax Office describe this group as "by their very nature...employees",
• 761,500 (79%) had no employees, they were offering only their own labour - a clear marker suggesting employee-like status,
• 338,485 (35%) were not able to subcontract their own work - an essential feature of genuine contractors,
• 367,498 (38%) did not have authority over their own work - another essential feature of genuine contractors.
The Alienation of Personal Services Income measures, in which the ABN system is a crucial element, is currently under review. The CFMEU has called for root and branch reform of the laws with all individual participants in the construction industry to be deemed as employees unless they pass stringently applied tests. In addition all ABNs issued to apprentices, guest workers, labourers and trades assistants should be cancelled.
In the coming months with the results of the current review of ABN tax laws, we will see if the Federal Government is serious about restoring law and order to the construction industry or will the siren song of the business' lobby prevail again? Time will tell.
31 August 2009
