Contracting · Australia
Independent Contractor Agreement Template (Australia)
An ABN and an invoice no longer settle whether someone is a contractor — the test now looks at the whole working relationship, and the sham contracting defence is harder to run than it was. Drafted to reduce reclassification risk under Australian law.
What this document does
Papering a genuine contract for services
A contractor agreement describes an outcome to be delivered, not a job to be performed. The clauses that matter are the ones about control, delegation, tools and risk — because those are what a court and the ATO actually look at when the label is challenged.
What’s included
Clauses in this template
- Scope of services and deliverables — not duties and hours
- Control, tools, subcontracting and delegation rights
- Payment against invoice, with no leave entitlements
- Superannuation position stated openly
- Insurance, indemnity and intellectual property assignment
The law that applies
The whole of relationship test
From 26 August 2024 the test looks at the real substance, practical reality and true nature of the working relationship — not only the terms agreed at the outset.
From 27 February 2024 the sham contracting defence changed from a recklessness standard to a reasonableness one. An employer must now show it reasonably believed the engagement was a contract for services.
From 1 July 2025, contractors earning above the contractor high income threshold may notify to opt out and be assessed on the start-of-relationship test instead.
What goes wrong
Pitfalls we see in practice
Relying on an ABN and an invoice
An ABN is a tax registration. It says nothing about control, delegation, or who carries the commercial risk — which are the matters that decide the question. A worker who holds an ABN but works set hours, uses your equipment and cannot send a substitute is an employee whatever the invoices say, and the invoices will be evidence against you rather than for you.
A contract that says contractor and operates as employment
The whole of relationship test looks at practical reality. Where an agreement grants a right of delegation nobody has ever exercised, or describes a project outcome for someone who in fact works a roster, the document begins to work against the engager — it shows the parties understood the distinction and drafted around it rather than observing it.
Ignoring superannuation
A contractor engaged wholly or principally for their labour can be an employee for superannuation guarantee purposes even where they are genuinely a contractor at general law. This is the single most commonly missed obligation in Australian contracting, it is assessed retrospectively, and unpaid superannuation compounds with interest and administrative penalties.
Assuming the old sham contracting defence still works
Until February 2024 an engager could answer a sham contracting allegation by showing it had not been reckless. The standard is now reasonableness: the engager must show it reasonably believed the arrangement was a contract for services. Not having turned your mind to it has stopped being an answer.
Questions
Frequently asked
Does having an ABN make someone a contractor?
No. An ABN is a tax registration, not a characterisation of the working relationship. Someone can hold an ABN, invoice you monthly, and still be an employee on the substance of how the work is performed.
What is the whole of relationship test?
The approach in force since August 2024: instead of looking only at the terms agreed at the start, it examines the real substance, practical reality and true nature of the relationship as it actually operates.
Do I have to pay superannuation to contractors?
Often, yes. A contractor engaged wholly or principally for their labour can be an employee for superannuation guarantee purposes even where they are genuinely a contractor at general law. This is the obligation most commonly missed.
Legally reviewed by [REVIEWER NAME], practising Australian solicitor — [DATE]. [DRAFT: confirm reviewer and date before publishing.]