Independent Contractors Australia welcomes government guarantee on tax law changes

Independent Contractors Australia head Ken Phillips has welcomed comments from financial services minister Bill Shorten indicating the Government will not make any further changes to taxation laws for independent contractors.

The comments come after Phillips took the Government to task last month, alleging Labor and unions had “an agenda against Australia’s self-employed”.

“If what he is saying is an iron-clad guarantee, then this is extremely welcome,” Phillips says. “We have repeatedly asked for and want to hear a statement they made before the 2007 election, which is a very simple “no change” promise.”

“It sounds as if that is what he is saying. And if that is so, then it is extremely welcome,” he says.

Shorten told the Australian Financial Review today the Government will make no changes to taxation laws for independent contractors.

“It is not this Government’s policy to make further changes to the personal services income laws governing independent contractors,” he said. “We have no desire to change those laws, or make life difficult for self-employed working people.”

“Quite the opposite – this government encourages entrepreneurship and innovation.”

The comments come nearly one month after Shorten said that changing the personal services income regime was not Government policy “at this time”.

Phillips said last month that millions of micro-businesses were in danger after the Government had refused to rule out changing the laws. He alleged there was a union committee determined to “kill off” independent contractors.

The concerns came after the Board of Taxation made recommendations about taxing micro-businesses, including distinguishing between different types of income and forcing operators to have at least two employees to qualify as a business.

Leaving the taxation issue aside, Shorten also attacked the ICA for its position on “dodgy” employers forcing employees into independent contract arrangements to avoid paying super and other entitlements.

“The ICA knows this, but presumably choose to ignore it for ideological purposes,” he said. “Workers most likely to be caught out by sham contractors are often young, low-skilled, recent migrants or other groups who lack bargaining power and may not be aware of their entitlements.”

Shorten warns the Government will continue to crack down on sham contractors, saying the ATO will “come down hard on employers who try to rip off their workers through sham contract arrangements”.

However, Phillips disagrees with the Government’s methodology and says the way to address sham contractors is through Fair Work, not the ATO.

“There is no need for new laws in this area. It’s simply a matter of applying the matters under statute that are already there. We’re as supportive of that as anyone, but you can’t do that through the ATO – you need to address that all through Fair Work.”