Salaries for part time nanny ABN contractors

Last week I kept reading on the web, how it was okay to pay your nanny as a contractor if they work less than 30 hours a week.

I really don’t believe that this is the case.

Whilst the 80/20 rule, used in its most basic sense, indicates as long as you’re not deriving more than 80% of your income from one source your a contractor. This is only one of the tests relating to contractor status. A nanny providing ongoing regular set hours to more than one set of parents, does not necessarily make them a true ABN contractor.

There are a number of tests to determine if an individual is an employee or contractor and the determination is mainly driven by the nature of the work performed rather than the frequency.

Whilst it is much easier in the short term to process your nanny as a contractor you may be breeching a number of different legislative requirements with the ATO, Fair Work Australia and Work Cover. Each body has the capacity to undertake audits and issue fines for incorrect processing regardless of whether your nanny presented you with an ABN and requested payments through invoices. At the end of the day, if you are deemed to be an employer it becomes  responsibility to have processed your nanny as an employee.

The best way to determine how to pay your nanny is to look at the nature of work that is being performed and use the following employee/contractor tests with the ATO or Fair Work Australia.

If you find your nanny is a contractor, you might still find you are not totally free of additional obligations and  that you are required to pay superannuation for the supply of a 100% service and/or cover your nanny for workers compensation (laws vary between states). However if your nanny is working less than 30 hours a week you are not required to pay superannuation.

For further information please contact Domestic Payroll.