I remember someone told me a significant difference between employee and contractor was that the contractor was liable to remedy defective work at their own expense.
ATO use to use the 80/20 rule.
they are both only one of the tests that AtO use,dont know about workcover.
the first one is the "results" test (this needs to be applied to EACH individual generating Personal Services Income.
n U nder your contract or arrangement, will your business only
receive payment when the work has been completed, that is,
after producing the contracted result?
n Does your business need to provide the equipment or tools
necessary to do the work?
n Do you have to rectify defects in the work, or is your business
liable for the cost of rectifying defects?
If you dont pass that, you go onto the 80/20 rule, (80% of your income is from one client only)
and then if you pass that you also need to pass one of the remaining 3 rules.
My husband just got caught out on this. He worked for about 12 months as a contractor, and then moved to permanent. unfortunately, this was his only contract in the 12 months, so he was a big fail on all the tests.... and has got a big tax bill to pay. The worst thing is that it limits the deductions you can make... so we also couldnt claim back the interest on our business debts........ GRRRR, that debt is going to be a ball around our neck for ever, it seems!
but I think that tax bill is for him only... I dont think the company he worked for will be responsible to pay anything. I guess it would be interesting to find out.