Hiring a VA? Here’s What You Need to Know About Superannuation Obligations

The way we engage Australian Virtual Assistants - the majority of whom will be set up as independent contractors - is changing, and if your business uses VAs, OBMs or Freelancers in general, it’s important that you understand what’s at stake.

For years, the prevailing belief has been that hiring a VA (or any independent contractor) negates any employee-related on-costs: no PAYG withholding, no workers comp... and definitely no superannuation.

But recent legal rulings and ATO changes are reshaping that belief, and businesses who fail to keep up could find themselves unexpectedly liable for superannuation contributions... and more.

Here at Find a VA, we’re proud to connect Australian businesses with quality-certified, insured, professional and independent Australian VAs and OBMs. But part of what we do is also focused on educating our wider community about how to engage those VAs correctly… and that includes understanding what the law now says about superannuation obligations.

So, you’re probably wondering what’s changed.

In a nutshell, recent High Court rulings and subsequent ATO updates have made it clear that if a contractor is an individual (not a partnership, company or trust), and the contract is primarily for their labour, you may be required to pay superannuation – even if they have an ABN… and even if your contract says otherwise.

The ATO’s position is now firmly focused on substance over form. That means they’ll look at the reality of the working relationship, not just what the agreement says.

What that means in layman’s terms is that if the working arrangement looks like an employment relationship, acts like an employment relationship, then it may be treated as one in the eyes of the law.

According to the ATO’s own guidelines, these are the key factors (or “indicia”) used to determine whether a worker is an employee or an independent contractor:

Factor	Employee	Independent Contractor
Control	You control how, when and where the work is done	They decide how to complete the work
Payment	Paid by time worked	Paid for a result or outcome
Delegation	Cannot delegate their work	Can delegate or subcontract if allowed
Tools/Equipment	You provide tools and software	They supply their own
Risk	You bear risk for errors or rework	They are liable for rectifying their own work
Goodwill	You benefit from any goodwill created	They build their own goodwill as a business

If you’re looking at engaging the services of a VA or OBM and the relationship ticks the boxes on the left-hand side of that table, you may be walking straight into superannuation liability… even if the VA is working under an ABN.

And it doesn’t just stop at super!  While superannuation is the headline risk, it’s not the only one.

Misclassifying a worker as a contractor can also create exposure to:

• PAYG withholding obligations

• Payroll tax

• Workers compensation insurance

• Significant penalties for non-compliance

In a world where knowledge is power, in situations like this we believe it’s important to be informed and stay proactive.

Here’s our tips to help you stay on the front foot when engaging a VA:

1. Choose outcomes-based agreements

   Wherever possible, engage your VA for a defined result or deliverable – not an hourly rate.

   
   

2. Clarify delegation rights

   A true contractor should be able to delegate or subcontract if needed. Ensure your contract reflects this.

   
   

3. Request a professional, purpose-built agreement

   VAs working with Find a VA and VA Institute have access to contracts drafted in consultation with our Australian legal experts. Avoid informal arrangements or unclear templates.

   
   

4. Get advice from your accountant

   If in doubt, check your superannuation obligations with a qualified advisor. This is your responsibility as the engaging party.

With our Virtual Industry thriving, more and more Australian Virtual Assistants are supporting an increasing number of small businesses to grow with flexibility, efficiency and support… so this matters more than ever.

In order to maintain that value and avoid compliance headaches, businesses must understand how to engage VAs the right way.

At Find a VA, we make it easy by connecting you with trusted, insured and industry-certified Australian VAs and OBMs who understand how to operate professionally… and legally.

We also educate both sides of the equation – so you, the client, are confident that your business is protected.

Hiring a VA is smart. Hiring one the right way is smarter.