ICA is pleased to report on its second year of operation in what has proven to be another highly active period. Two major projects consumed a great deal of time along with a number of other, more normal activities.
Within the range of ‘normal’ activities, ICA has:
- Finalized the design and operation of the Website, including an important upgrade of the site’s visual content. The Website is now functioning well and continues to prove its worth as the key communication tool through which ICA delivers information to subscribers and other interested parties. The regular e-mail alerts and updates are now sent to several thousand people registered on ICA databases. The capacity for subscribers to communicate with the committee via the Website has alerted the committee to several important issues which resulted in detailed campaigning.
- Made a submission to the Senate Inquiry into Australia’s Insolvency laws. This submission was made following an invitation from the Senate.
- Made a submission to the Victorian Review of Occupational Health and Safety. This is the first time ICA has commented on OHS issues and we approached the subject from the perspective of the need to protect all workers no matter what their legal status when working.
- Commented on several judicial test cases of independent contracting versus employment.
- Expressed support for the ATO’s taking unresolved tax issues to independent courts for judicial guidance—on the condition that the process has integrity.
- Made a submission to the South Australian Review of Workers’ Compensation, a review which contained proposals directly threatening independent contractors’ status and rights.
The two big issues which consumed significant ICA resources were the ILO and a surprise development on tax.
The International Labour Organisation
In late 2002, ICA became aware that the ILO was readying itself to engage in a key debate on the status of independent contractors. Through the ICA networks we were afforded the opportunity to review ILO discussion papers and to make comment—which we did during February and March of 2003. The prospects for independent contractors were not good, as the ILO looked like heading down a path which would have denied independent contractors their basic right to exist. In essence, the ILO proposals would have:
- made fundamental changes to the definition of independent contracting;
- accepted the idea of the ‘dependent contractor’ (which ICA rejects as illegitimate); and
- created significant potential impact on tax, commercial, OHS and other critical policy areas.
Even though the ILO does not direct governments as to what their domestic policies should be, their decisions create significant moral force which sets trends for both domestic and international policy settings.
Given our concerns, the full networks through which ICA exists were activated and proved to be highly effective. This included domestic networks and some international networking—particularly with independent contractor/small business groups in the UK. Our intention was to run a lobby campaign from Australia. In April, however, the suggestion was made to us that our presence in Geneva at the ILO meeting would be welcome. This resulted in hurried activities to facilitate the appointment of an ICA representative as an observer to the ILO meeting.
Our ICA representative attended the ILO debate in Geneva over two weeks in June and met with UK groups on the way over. This lead to the Professional Contractors Group of the UK also achieving observer status through the UK government—thus ensuring that ICA was not the sole independent contractor voice. As an observer, ICA was not allowed to address the ILO formally. That privilege is restricted to governments, employers and unions. Independent contractors do not have recognized status at the ILO. ICA did, however, have the opportunity to lobby actively, one-on-one, with employers, unions and government representatives.
In hard debate over two full weeks, the ILO came to a formal Conclusion which recognized the status of genuine independent contractors. Such formal recognition is a significant step forward for independent contractors.
The full report of the ILO activity and outcome is on the ICA Website.
Tax and the Profit-Yielding Structure Test
In early 2003, ICA received a communication from a subscriber informing us of a Personal Service Income Private Ruling that was, without doubt, odd and confusing. The ruling applied tests that ICA had never heard of, which were confusing and made little sense. We did not react immediately, but undertook a long process of investigation to ascertain the facts. It turned out that the ruling was the re-application of an old business test that the ATO had used for many years, but which had disappeared from view during the PSI tax-settlement process. It was, in effect, the testing process that had caused a lot of the problems for independent contractors.
It took until August 2003 before ICA believed that it had achieved sufficient understanding of the issues and we were prepared to act on the matter. We issued a statement on our Website claiming ‘tax confusion’ and sent a letter to the Assistant Treasurer. Considerable media interest was generated. The outcome has been a process of productive engagement with several government departments and the ATO, and a response from the Assistant Treasurer. All details are on the Website.
At the end of 2003, ICA is involved in working with the ATO on the drafting of new (lay language) information for independent contractors which we hope will bring greater clarity to independent contractors’ tax issues—namely, PSI, income-splitting, profit retention and related items. It may take several months before an outcome is achieved, but we hope to see positive results in 2004.
2003 has been productive, busy and successful. We look forward to 2004.