Abbott rules out tax changes for independent contractors, but sector wants definitive statement from Gillard

The chief of the Independent Contractors Association Ken Phillips has welcomed Opposition Leader Tony Abbott’s promise that he will not proceed with recommendations from the Board of Taxation to change tax rules to crack down on so-called sham contractors and says the Government must now match Abbott’s promise.

The Board of Taxation’s recommendations were aimed at changing personal services income rules to prevent what the board believes is a rise in sham contractor arrangements, whereby contractors are actually working in “employee-like” arrangements but benefiting from the tax advantages of working as a contractor.

The Independent Contractors Association has been highly critical of the recommendations, saying they “would significantly inhibit the capacity of self-employed people to conduct business”.

Assistant Treasurer Nick Sherry supported the Board’s recommendation in an initial statement made in December 2009, but has yet to make any formal further statements.

Speaking to reporters after the COSBOA nation summit yesterday, Abbott ruled out backing the Board’s recommendation if the Coalition was to win office.

“The Government promised not to change it in opposition but is threatening to change it and I call on the Government to rule out any changes to this legislation which is working perfectly well as it stands,” Abbott said.

Phillips is pleased with the Coalition’s stance, but now wants to hear more from the Government. He says his organisation wrote to former Prime Minister Kevin Rudd on the issue but did not receive a reply.

“The issue is totally up in the air and completely uncertain,” he says.

“We’ve got black and white from Abbott, but from Gillard I would have to say that everyone is sitting in complete bemusement. While that continues, one has to wonder if there is an agenda here.”

Phillips says that if the Government does not make its position clear prior to the election, his organisation will be taking this as a sign the Government is intending to make changes in this area.

“A no-reply will have to show an intention to change it,” Phillips says.

The issue may already be starting to have an effect on voting intentions among the self employed, according to recent research from Roy Morgan.

Analysis of Roy Morgan voting intention figures for the past three months from April to June shows the self- employed are now heavily in favour of Coalition (58%) ahead to Labor (42%) on a two-party preferred basis.