Mining tax: employee, labour-hire, or contractor on an ABN?

Before you work out a single deduction on a mine site, work out how you are engaged, because that answer sets the shape of everything after it. Almost everyone on a haul truck, a rig or a process line is a PAYG employee, and this guide is written for them. But mining runs a lot of its workforce through labour-hire firms, and that arrangement confuses more people here than in any other industry, so it is worth stopping on before you read on.

Why this is the first question

Whether you are a PAYG employee or a contractor on an ABN decides three things at once. It decides what you are allowed to claim, it decides which return you lodge in July, and it decides whether GST is any part of your year. Those are not two versions of the same tax, they are two different systems, and reading the wrong one wastes the whole year. The great majority of mine workers are employees, whether the miner puts them on directly or a labour-hire firm places them on site, so this guide is built for the employee. Confirm that is you and every chapter that follows sits on solid ground.

Labour-hire workers are still employees

This is the point that trips up more mine workers than any other, so read it slowly. Being paid through a labour-hire or agency firm does not make you a contractor. If tax is taken out of your pay before the money lands in your account, and super is paid in for you, you are an employee, no matter what the placement or the agency arrangement is called. Plenty of workers hear "you're on with the agency" and assume that means an ABN and invoicing, and almost always it does not. The agency is simply your employer instead of the mine. You still get a payslip, you still get an income statement, and you still claim the same work deductions as anyone the miner hired directly. The only difference is whose name is at the top of the payslip.

How to tell which you are

You do not have to read the fine print of a contract to settle this. Two things on your pay tell you where you stand.

• Tax withheld and super paid in. If your payslip shows PAYG tax taken out each pay, an income statement appears in myGov after 30 June, and super is going into your fund, you are an employee. This holds whether the payer is the mine or a labour-hire firm.
• An ABN and an invoice. If you quote an ABN, send an invoice for your work, and are paid the full amount with nothing withheld and no super, you are a contractor sorting your own tax and super.

The quickest test is the payslip. Tax withheld plus super paid for you equals employee, and this is your guide. If neither is happening and you are billing under an ABN, you are on the contractor side and the rules run differently.

What the employed mine worker claims

If your roster pay arrives with the tax already taken out, this is your page. Your job at tax time is claiming back the site costs you funded yourself and no one paid back. For an employed mine worker that is your PPE and protective clothing, tools that cost $300 or less claimed immediately, the renewal of a ticket or licence you already hold, self-education that keeps your current role current, the work share of your phone, your union fees, and genuine work travel that is not the commute to site. Each of those has its own chapter here, and each carries a catch or two worth knowing before you claim it.

What changes on an ABN

If you invoice under your own ABN, you are not lodging a wages return. You are running a business, and the whole footing moves.

• Income is declared in full. Every dollar you invoice goes on the return as business income, with nothing withheld along the way for you.
• The deductions run wider. A business reaches costs an employee never can, including the instant asset write-off that lets you deduct an eligible asset outright, which is the concession every generic mining tax article pushes and which only exists once you are on an ABN.
• GST starts at $75,000. Once your turnover passes $75,000 in a rolling twelve months you must register for GST, add it to your invoices, and lodge a business activity statement, the BAS, through the year.
• You set your own tax and super aside. Nobody withholds for you, so the tax and the super are yours to put away before you spend the rest.
• PSI can claw deductions back. Where a solo contractor is really doing an employee's job for one payer, the personal services income rules can limit your deductions to what an employee could have claimed anyway.

That is the outline, not the manual. An ABN carries a real set of obligations wider than any one chapter can cover, and if this is you, a registered tax agent who knows mining will earn their fee, especially in the first year GST comes into play.

If you are both

A wage job on one roster and your own invoiced work under an ABN in the same year does happen, and the fix is to keep the two clean and apart. Your wages and the work deductions this guide covers sit on the employee side. The amounts you invoiced and the business deductions that belong to them sit on the business side, in their own records, so neither one bleeds into the other when you lodge.

The records differ too

The gear you keep for the tax office differs by side too, though logging each cost as you incur it beats rebuilding a whole roster year from memory either way. An employee keeps receipts, a note of the work-use share on anything used for both work and home, and a logbook or kilometre record for any deductible driving. A contractor keeps full business records, income and expenses both, and the BAS lodgements once GST registration is in play. On either side, the ATO's free myDeductions app will hold the basics as you go.

The bottom line

Work out which one you are first, because everything else follows from it. Tax withheld and super going in means you are an employee, agency placement or not, and this guide claims your work costs against your wages. An ABN and invoices, past $75,000 with GST and a BAS to run, means you are contracting, and the rules are wider. Settle that one question and every hour you spend on your tax lands in the right place.

General information only, not tax advice. Check the ATO or a registered tax agent for your situation.