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The hidden risk of engaging sole traders

Published 1st August 2022

The hidden risk of engaging sole traders

The ATO’s treatment of non-permanent workers predominantly sits around the fair and required payment of tax and superannuation earned by an individual worker. 

The ATO has the power to make directors of companies responsible and liable for any worker engaged (including sole traders) where taxes and superannuation are not paid in full. 

There is always a possibility that a sole trader is not paying the required legislated taxation and superannuation. And there is no way for you or Oncore to ensure they pay this correctly. This puts you at risk should you engage with a sole trader who has not paid the required amounts. 


What is Oncore’s solution? 

Oncore follows compliance protocols to protect our Clients and our own business, particularly in relation to engagement models. 

Our risk management steps include engaging only PAYG workers or those who are paid via their own Pty Ltd companies. This avoids the need to conduct compliance reviews of sole trader arrangements and protects against exposure to ATO audit risk and penalties.

With the ATO scrutinising companies making payments to sole traders, it’s essential to have processes in place to ensure all contractors are compliant.


The benefit to contractors

PAYG workers

Oncore calculates, reports and pays PAYG tax and superannuation contributions for PAYG workers. We comply with the ATO’s Single Touch Payroll obligations to provide you with confidence in our payroll management services. 

PAYG workers have payslips issued via our secure, online portal each time payments are processed. These payslips share details of their total earnings, super contribution amounts, PAYG tax amounts and net payments to their bank accounts. Each payslip provides year-to-date earnings, tax and super figures as well.

This simple, compliant method of payment allows workers to focus on their contract roles without the demands of invoicing and managing their tax and super obligations from received funds. 


Pty Ltd workers

Oncore processes total earnings + GST to workers with their own Pty Ltd companies. Instead of a payslip, Recipient Created Tax Invoices (RCTIs) are issued via Oncore’s secure online portal each time a payment is processed. These RCTIs capture company details, total earnings, the GST component and the total amount paid to the company bank account. 

This provides a simple, clear payment record to assist with BAS and end-of-financial year tax obligations. 


To implement a compliance strategy or review your existing arrangements, contact Oncore Services on 1300 654 484 or