Hi ATO Community,
We have several independent contractors who may be deemed as employees for super guarantee purposes (paid mainly for their labour). Currently, we process their payments by, Receiving and paying their invoice (including GST) through our Accounts Payable.
What are our requirements for PAYG, GST, FBT, STP, QE reporting & Super:
For these contractors. When they become deemed as employees & require Super payments
Do we also then need to:-
路 Processing their super separately through payroll and report this with Payday super
路 Deduct PAYG withholding tax amounts & pay those to ATO
路 Report any FBT amounts
路 AND Not Pay the GST on the invoice
We are trying to understand our obligations under Payday Super from 1 July 2026 and have the following questions:
1. Once a contractor is deemed as an employee,
Do those independent contractors permanently change to that category, (pseudo employee)
OR, can they be deemed as an employee on some invoices & not others?
2. After categorising an independent contractor as an employee for Super liability,
Do they basically become an Employee & No longer a contractor, with an invoice
3. PAYROLL System inclusion
With the change in Super Payments eligibility for independent contractors. Are we now best to include them as employees in our payroll system & therefore not accept invoice with GST
4. GST payments
When independent contractors become eligible as pseudo employees, are we able to Not pay the GST part of their invoices.
5. PAYG & FBT
With pseudo employees, are we then required to withhold PAYG tax components from their invoices & report FBT amounts accordingly
SUPER PAYMENTS vs GST ISSUE
We understand that from 1 July 2026, payments to independent contractors paid mainly for their labour are included in Qualifying Earnings and QE must be reported in STP. However, we currently pay our contractors by processing their invoices through Accounts Payable (bills), which means these payments are not captured in our payroll/STP system as QE.
If we move contractor payments into payroll to capture QE in STP, how do we handle the GST component on their invoices? Payroll does not have GST functionality, and we need to claim the GST credit elsewhere (if so how where when).
2. STP REPORTING FOR CONTRACTORS
We also note the following statement on the ATO website:
"It isn't mandatory to report payments made to independent contractors paid mainly for their labour in STP."
Does this mean it is acceptable to continue paying our contractors via their invoice bill, without needing to report QE or super liability through STP at all?
Thank you in advance.
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