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Payments for labour

Note these guidelines and rules also apply to contract teaching services.

This topic includes:

Legal requirements

In paying people for services, the University must:

  • Maintain uniformity in the treatment of payments being processed
  • Fulfil its obligations under the Income Tax Assessment Act 
  • Fulfil its obligations under Workers Compensation provisions
  • Fulfil its obligations under Payroll Tax legislation.

Details of ATO requirements can be found in Income Tax Ruling 2129.

Payments to University employees

The obligations of the University under the Income Tax Assessment Act are that payments to employees as individuals shall be made through the salaries and wages system. This is irrespective of the nature of the work performed for the University and irrespective of whether it is additional to normal hours, performed at home, or performed on own equipment.

Hence, any employee of the University doing work for the University in whatever capacity is to be paid through the Salaries and Wages system.

The Income Tax Assessment Act includes in its definition of salaries and wages any payments made:

  • Under a contract that is wholly or principally for the labour of the person to whom the payments are made.
  • To any employee who maintains that work is or was performed under a business name or in a capacity as a contractor to the University.

All payments to Macquarie University staff for services provided must be made through the Personnel Office. 

Payment to individuals who are not normally employees

Where an individual who is not an employee of the University performs work for the University, the University is obligated to process such payments through the salaries and wages system and payments are subject to PAYE tax deductions, unless the individual meets the individual business criteria.

A written agreement should be obtained from the contractor setting out the service to be provided and payment details, prior to performance of the work.

Individual business criteria

To be exempt from the requirement to be paid under the wages and salary system, an individual contractor must satisfy all these criteria:

  • Not be a member of Macquarie University Staff
  • Provide a bona fide registered business or trade name including ARBN
  • Provide evidence that the business is actively engaged in the market place in the business for which the University is utilising their services. For example, an entry in the telephone book indicating the nature of the business.
  • Provide evidence of holding Workers' Compensation coverage.

In all cases the onus is on the contractor to provide proof of exemption to the University.

Payments to companies

For services provided by a company, PAYE deductions do not apply, as the company itself has obligations under the taxation system.

Reminder: University employees cannot be paid except through the salary and wages system.

Requisition, order and payment for services follow the normal procedures.

It is important in such cases that the engagement for work be made with the company at the outset and not with an individual. It is essential for all approvals to be in place before work commences.

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