If you incorrectly treat an employee as a contractor, you can face penalties and charges for not meeting your required obligations.
These penalties and other charges include..
- PAYG withholding penalty for not meeting your PAYG withholding obligations
- Super guarantee charges for not meeting your super obligations, made up of super guarantee shortfall amounts (amount of super contributions which should have been made into a complying fund), interest and an administration fee.
Furthermore, unlike super guarantee contributions, the super guarantee charge is not deductible.