Different state legislation causing confusion

Accounting and Taxation Services agent Rosemarie King says having different legislation across states – particularly regarding work cover which is required in New South Wales but not in Queensland – has resulted in a lack of auditing for Qld-based company directors.

“It was around about [the year] 2000 when we had huge audits in NSW, which were instigated by WorkCover, and what they did was in WorkCover going through and auditing, and they started off with companies in the construction industry, they were able to pick up ... directors who were not covered by work cover,” Ms King said.

“This, in turn, also then brought to [the] attention of the tax office, that these same directors having not paid for work cover, were also not paying superannuation, so these directors got hit in all these different areas. It was easy because WorkCover instigated the whole thing.”

Ms King said living in Qld, where work cover is not mandatory, has led to a lack of auditing for company directors.

“The tax office, in turn, [does] not push superannuation on directors, because do directors actually get a wage? They don’t know. WorkCover hasn’t clarified this. If they don’t have to be covered by work cover, that means they’re not on a wage, are they?” she said.

Ms King added that difficulties also arise when building companies need to provide work cover for sub-contractors.

“If the builder is covering [the sub-contractor] with the work cover, and that brickie actually falls down off the top row of the bricks and injures himself, the builder is the one that’s going to get penalised on the premiums that you’ve paid on work cover.

“So the builder says, ‘Well, I don’t want to be trapped with this ... if you want me to employ you, you have got to become a company.’ Now, in Queensland we go back to this old problem, if this brickie’s got his company, he’s the director of the company, he actually still doesn’t have to be covered by work cover. What happens if he chucks himself off the top row of bricks?”

Ms King said the government needs to make a “totally federal legislation so that it’s all the same legislation throughout Australia” to ensure a fairer, less complex system.

“What [the government] needs to do is open up the work cover to sole traders and partnerships, in which case they are assessed on their prior year tax assessment as to their level of income, and that’s what their premium is calculated from,” she said.

“Then it’s their own work cover policy that they’ve got, if they toss themselves off the top row of bricks, it’s themselves that’s going to get that premium on their work cover.”