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Enterprise Evolution - Contractor v Employee

Tuesday 27 August 2019 |
Annette Pike
The Gig Economy

Even though we're a little tired of talking about the ATO we feel we need to keep clients informed.  In March of this year we reported that the Australian Taxation Office had committed to close our audit case and confirm that we are compliant with a contractor model.  We were later surprised by the ATO’s intention to launch a second audit to investigate our business model again, and investigate contractors and clients. Needless to say, we were strident in our objection, to put it mildly.

We must give recognition to the Assistant Commissioner for the Complex Cases Program and his team for agreeing that a second audit was not required and issuing a letter of finalisation. 

What was that all about?: The transcription industry in Australia is thriving and there are two business models that are utilised; transcripts that are completed by employees or contractors and both are legitimate.  The ATO have helpfully provided a checklist on their website to assist businesses and individuals to ascertain whether work is completed by an employee or contractor.  Don’t trust it.  We frequently consulted this checklist, keeping records, and it confirmed work was completed by contractors but the ATO did not take this into account when acting against OutScribe and individual contractors.  In our case we believe the agenda behind the targeting of our business overrode legal or common sense.

The internet has given individuals the freedom and ability to pursue the dream of working for oneself and all the benefits that come with it – flexibility, control and entrepreneurship.  Some call this the ‘gig economy’.  The ATO is very concerned with the gig economy and has grouped it in with the ‘black economy’, which could not be further from the truth.  The contractors that the ATO targeted because of their association with OutScribe were paying taxes and were responsible for their own financial management.

Online Job Platforms: Businesses, such as OutScribe, have created an online platform for clients to readily have audio files transcribed and independent transcription contractors to produce the completed transcripts.  Similarly, other platforms such as Upwork, Freelancer and Uber enable a similar interaction.

Micro Business Enterprises: Industry has evolved and there is a sector of the public that want, and demand, independence and autonomy over their future.  Why do some people want to work from home transcribing?  You can read a few stories here.  I also started my own small enterprise working from home some 20 years ago.  I’m a single mum and I needed to find a way to provide for my family but also be present for them.  Transcribing audio files for a variety of clients was the perfect fit and I found working for myself empowering.  I can also model to my children that combining family responsibilities and determining one’s own financial future was indeed possible.

Required Reformation: The Australian Taxation Office has a vital responsibility in ensuring taxes are collected so that our nation can function. However, the ATO has unparalleled powers that allow it to act like a judge, jury and executioner and they are seeking evermore powers, benignly masquerading under the guise of ‘doing good’.  The Treasury Laws Amendment (Disclosure of Business Tax Debts) is one of the latest attempts to gain more power that has the capacity to stifle small enterprise. 

Future: Now that we have a surety and confidence in the future of OutScribe we are looking forward to upgrading our client interface and reflecting our fresh approach. The transcription industry is growing and rather than rail against the global economy we anticipate and evolve with the times. If only the ATO had the same attitude...

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    My gratitude for the transcript, it's very good, thanks so much! (also the process was surprisingly easy and a relief!)

    Maureen, University of Queensland

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