Factors to determine self-employment 043-03030000

A self-employed customer will:

• have control over their work
• supply most of the plant, equipment or materials
• have responsibility for losses or damages caused by their business activity
• have control over the use of any profit
• work under a contract for service to produce a result

An employed customer will be:

• receiving a wage or salary
• likely to have some kind of supervision
• integrated into the business they are supplying their services to
• working under a contract of service, meaning they are usually paid an hourly or daily rate

Make a decision by weighing up the facts to decide if a customer is self-employed or not.

The Australian Taxation Office (ATO) website contains a guide called 'Are you in business?' which can help work out if some activities count as running a business. See the Resources page for a link.

Factors to consider to determine if a customer is running a business include:

• Does the activity have a significant commercial purpose or character?
• Is there more than just an intention to engage in business?
• Is there a purpose of profit as well as a prospect of profit?
• Is there repetition and regularity in the activity?
• Is the activity of the same kind and carried on in a similar manner to businesses in the industry?
• Is the activity planned, organised and carried on in a business-like manner?
• What is the size, scale and permanency of the activity?
• Is the activity better described as a hobby, recreation or sporting activity?
• Does a contract exist to produce results or for labour?
• Who has the power or right to make decisions?
• Is the work done for the business or as part of the business?
• Does the risk of the profit or loss from the work rest with the person or the business?
• Who owns the business premises, tools and equipment?
• Has the customer received a payment summary?

The Decision Support Tool:

• is included in the Self-Employment workflow in Process Direct
• will display if a Service Officer selects ‘Unsure’ to the question ‘Is the customer self-employed?’
• gives a recommendation

The information, including the recommendation, will be recorded in a Process Direct Note.