This paper is a preliminary investigation of the impact of the changing legal structures of employment on the tax system and the tax system on the structure of jobs. This issue is explored with special reference to the growth of contractor employment in the Australian construction industry. The paper shows how tax liabilities for individuals can be halved where they are deemed to be contractors. The paper estimates that in the mid 1990s this resulted in the average construction contractor paying around $6,000 a year less than equivalent PAYE workers. Losses to tax revenue could, therefore, be up $2.2 billion annually. The paper concludes that more research is required into the nexus between tax and employment structures. This dynamic has major implications for the future of work as well as the taxation system.
