Subcontract Agreements are simply agreements between a business and their subcontractors which are usually 12-month agreements signed annually.

Subcontract Agreements are usually used in the Construction Industry. Other Industries normally use Independent Contractor Agreements.

The main reason for using Subcontract Agreements is to formalise the relationship between your business and your Subcontractors which is designed to negate any potential liability.

Generally, you can use the one Subcontract Agreement for all your Subcontractors. In most cases it the description of services being supplied which is incorporated into each Subcontract Agreement is where each Subcontract Agreement will differ. 

Standard Subcontract Agreements are normally for a 12-month duration which of course are resigned every 12 months.  

A Taxable Payment Annual Report is a report required by legislation that needs to be submitted to the Australian Taxation Office by all businesses who engage Subcontractors by the 28^TH of August each year.

Taxable Payments Annual Reports are used by the Australian Taxation Office to identify undeclared income by comparing submitted Taxable Payments Annual Reports against a business’s reported income.

There is approximately $172 000 000 000 in unreported income which is identified by the Australian Taxation Office each year. It doesn’t take much to imagine a Subcontractor who has been caught by the ATO using the words, “I thought I was an Employee” or “well I was wondering about that, I don’t think I can be classed as a Subcontractor”.

Who do you think will be the ATO’s next phone call?

The ATO Media Release can be located here –

https://www.ato.gov.au/Media-centre

The ATO Media Release can be located here –

https://www.ato.gov.au/general/gen/making-a-tip-off/