Engaging tutors as contractors: what to check

7 min read · Updated 2026-10-18

General information, not legal advice. Laws and the regulators' rules change: check the sources below, and talk to your own adviser about your centre.

A new tutor says, helpfully, "I have an ABN, I can just invoice you." It sounds easier for everyone: no payroll, no super, no award rates to look up. Plenty of tutoring centres pay some tutors this way, and some of those arrangements are genuine. But whether a tutor is a contractor is not something you and the tutor get to choose, and the cost of guessing wrong lands on the owner. Here are the questions Fair Work and the ATO ask, and what changes when a contractor is genuine. It is the companion to our article on paying casual tutors, which covers tutors who are employees.

The question is the relationship, not the paperwork

Since 26 August 2024, Fair Work says a constitutionally covered business (usually one with Pty Ltd or Ltd in its name) uses the whole of relationship test. It looks at the real substance, practical reality and true nature of the relationship: the contract, and how the work is actually done. Sole traders and partnerships in NSW and several other states are state referred businesses and use the start of relationship test instead, so check which applies to your centre.

Either way, Fair Work lists the factors it weighs, and there is usually no single deciding one:

• Control: who decides how, when and where the lesson is taught.
• Financial risk: whether the tutor carries a loss when a job goes wrong, or is paid regardless.
• Tools and equipment: who supplies the room, the resources and the software.
• Delegation: whether the tutor can send someone else in their place.
• Hours: set hours on your timetable, or hours the tutor decides to finish a task.
• Expectation of work continuing: an ongoing weekly load, or a one-off job.

Be honest about how this reads for a typical centre. A tutor who teaches your students, in your rooms, on your timetable, using your resources, cannot send a stand-in and is paid by the hour whatever happens looks a lot like an employee. A tutor who runs their own business, sets their own method, carries their own insurance and is engaged to deliver a defined result looks more like a contractor. The ATO is blunt: an ABN, a business name, invoices, a contract that says contractor or the worker's preference does not make someone a contractor, and neither does what other centres do.

Sham contracting

In a joint release on 13 March 2026, the ATO and the Fair Work Ombudsman described sham contracting as an employer telling a worker that employment is an independent contracting arrangement when the employer does not reasonably believe it. Fair Work also reminds employers that it is unlawful to knowingly say something false to persuade an employee to become a contractor for the same work, or to dismiss an employee to re-engage them as a contractor. The release gives maximum penalties for each contravention of $19,800 for an individual, $99,000 for a business with fewer than 15 employees, and for a larger business the greater of $495,000 or three times the underpayment, on top of tax and super penalties.

When the contractor is genuine: ABNs and invoices

A genuine contractor runs their own business, so they quote an ABN and invoice you for their work. If they are registered for GST, which they must be once their own GST turnover reaches $75,000, their tax invoice carries GST and the details the ATO lists. Check the ABN on ABN Lookup first.

Some businesses issue a recipient-created tax invoice instead, writing the invoice on the contractor's behalf. The ATO allows that only when both of you are registered for GST, you have a current written agreement saying you will issue them and the contractor will not, and the kind of supply is one the Commissioner has listed in the Recipient Created Tax Invoice Determination 2023. The invoice must show both ABNs, reach the contractor within 28 days and be kept. Check the determination with your adviser before relying on one; do not assume it covers tutoring.

Super is still owed for most tutors

This is the part that surprises owners. The ATO says a contractor paid mainly for their labour is treated as an employee for super, whether or not they have an ABN: more than half the contract's value is for their labour, they are paid for their personal skills rather than a result, and they cannot delegate the work. That describes most individual tutors. A contract with the tutor's company, trust or partnership is different. Where super is owed, offer the contractor a choice of fund within 28 days, and pay it to the fund: paying an extra amount to the contractor does not count. Under Payday Super, payday for a contractor paid by invoice is the date you pay the invoice, and the super must reach the fund within seven business days after that.

• ✓Checked which test applies to your business: whole of relationship, or start of relationship.
• ✓Worked through each factor for each tutor, and written down why.
• ✓Never asked an employee to get an ABN or switch to contracting for the same work.
• ✓ABN checked on ABN Lookup before the first payment.
• ✓Tax invoices received, or a recipient-created invoice agreement checked by your adviser.
• ✓Super assessed for every contractor paid mainly for their labour.
• ✓Super paid to the fund within seven business days of paying each invoice.
• ✓Your adviser has reviewed the arrangement, and you review it again if the work changes.

Keeping the figures straight

Either way, the dispute is usually which lessons were taught, and by whom. In XTutio a pay run is built from the completed lessons on the roll, on your centre's own calendar. The covering tutor is paid at their own rates, each lesson is paid once across every run, and a lesson an earlier run missed is picked up as a late inclusion, so a contractor's invoice can be checked line by line against what was taught. A centre can switch on pay statements, so each tutor reads what an approved run pays them before they invoice.

An approved run downloads as a spreadsheet, or posts to your own Xero file as a wages journal once your centre has connected its Xero account, and your payroll and accounting software stays the system of record for pay, invoices and super. See family money and payroll, the training academy and payroll guide, and the money articles.

Questions centres ask

Can a tutoring centre pay tutors as contractors?

Only if the whole working relationship is genuinely one of contracting. An ABN, invoices or a contract that says contractor do not decide it, and a tutor working on your timetable, in your rooms and paid by the hour will often be an employee.

Do I have to pay super for a contractor tutor?

Usually yes, if you pay them mainly for their own labour. The ATO treats such a contractor as an employee for super, ABN or not, unless you contract with their company, trust or partnership.

When is super due for a contractor paid by invoice?

Under Payday Super, which started on 1 July 2026, payday is the date you pay the invoice. The super must reach the fund within seven business days after that.

What is sham contracting?

It is an employer telling a worker their employment is independent contracting when the employer does not reasonably believe it. Courts can impose penalties for each contravention under the Fair Work Act.

Sources

• Whole of relationship test, Fair Work Ombudsman. Read 2026-10-18.
• Sham contracting in the spotlight, Fair Work Ombudsman and Australian Taxation Office. Read 2026-10-18.
• Myths and facts, Australian Taxation Office. Read 2026-10-18.
• Super for independent contractors, Australian Taxation Office. Read 2026-10-18.
• Contractors - when to pay super under Payday Super, Australian Taxation Office. Read 2026-10-18.
• Tax invoices, Australian Taxation Office. Read 2026-10-18.
• Registering for GST, Australian Taxation Office. Read 2026-10-18.