Review set to toughen sham contracting laws
Road freight industry leaders have revealed further plans to stamp out the misuse of the ABN system to dodge paying tax, super, leave and other employee entitlements.
A follow-up statement released yesterday after last week’s industry roundtable in Canberra to discuss the sham contracting crisis, said it was agreed a review of the ‘Closing the Loopholes’ legislation would include the inconsistency of “employee” definition across the Fair Work Act and Tax Law.
“It is expected a plan would be developed for ministerial consideration as to how to best resolve this inconsistency,” said the communique prepared on behalf of all the major industry associations and unions at the summit convened by WA Senator Glenn Sterle.
The current law includes a “reasonable belief” defence. That means an employer taken to court for misclassifying a worker can argue: “We genuinely believed this was a contract for services, not an employment relationship.”
If they can show even limited evidence that they reasonably believed the worker was a contractor, they can potentially avoid penalties.
Minister for Employment and Workplace Relations, Amanda Rishworth noted that a 12-month review of the Closing the Loopholes Amendments would consider all potential improvements to the legislation and encouraged participants to actively contribute to the review process.
The roundtable participants also agreed that a national joint-agency enforcement and intelligence program be set up to combat ABN abuse with a series of operations over a 12-month period.
Agencies such as Border Force, the National Heavy Vehicle Regulator, authorised persons of the Australian Taxation Office (ATO) and the Fair Work Ombudsman, along with state or Australian Federal Police, where necessary, would comprise the nucleus of the enforcement team, the joint statement said.
The purpose would be to gather critical information on the industrial/tax and migration law abuses to then provide for high profile strike targeting of the sham practitioners.
The statement said there was also a commitment for the ATO to work with the Department of Home Affairs in identifying income tax anomalies of work-based visa holders in the road freight industry.
“These anomalies would identify which individuals or companies would require further investigation.”
At the roundtable the ATO outlined that road freight industries are required to report through a taxable payments annual report (TPAR) where they pay contractors to deliver road freight services.
This system was designed to prevent avoidance of tax through cash payments and the under-reporting of income but is less effective than it could be, the statement said.
“It was agreed the ATO would review how the TPAR is used to identify and action incorrect registration omitted income, labour expenses and non-lodgement to better ensure those who engage in shadow economy behaviour and deliberately operate outside the tax system are detected by the ATO.”
The roundtable group said it will meet again early next year to discuss the outcomes of enforcement action taken and the progress of the ‘Closing the Loopholes’ review.