Plumber tax: employee or subbie on an ABN?

One fact sits under every other chapter here, usually left unsaid: the way you get paid. In plumbing, employee or subbie is the question that comes ahead of all the rest, because it rewrites what a deduction is, which form you file, and whether GST ever crosses your desk. Pin it down first, and everything else in the guide slots into place.

Why this is the first question

PAYG employee, or subbie trading off your own ABN? Both are everywhere in the trade, now and then on the very same site, and which one you are governs how your costs get treated, the return you file, and whether GST becomes your problem at all. A lot of plumbers straddle both across twelve months: on the books for one firm, sending invoices to another.

How to tell which one you are

You can skip the contract wording. Two things give it away: the path the money takes to reach you, and who's directing the work.

A caution, though: the ATO judges the arrangement as a whole. An ABN in your wallet, and everyone on site calling you a subbie, count for little. Invoicing off an ABN won't turn you into a contractor if, underneath it, the work is really a job.

What the employed plumber claims

If your pay lands already taxed, this guide is written for you, and the task at tax time is recovering the work costs you paid for and weren't refunded. That means the tools you funded, expensed straight away below $300 and depreciated above it; the steel-caps, knee pads, waterproofs and gloves; sunscreen and sunglasses for the hours out in the open; the same-day driving from one job to the next; renewing a plumbing or gas licence you hold; revalidating your backflow; your trade or union subscription; the work slice of your phone; and study that keeps you current in the job you do. Every bit of it offsets your wages on your individual return.

What changes if you are a subbie

Bill off your own ABN and there's no wages return in sight. You're a business now, and that cuts both ways.

That's the shape of it, not the full manual. An ABN carries real obligations, more than a single chapter can properly cover, and if it describes you, a registered tax agent who knows the trade will more than earn their fee, particularly your first year inside the GST net.

A word on sham contracting

Some plumbers get an ABN pushed on them and are run as subbies, no super, nothing withheld, while the day-to-day reality is a job. It goes on in the trade, and sorting it isn't yours to shoulder. Where your setup smells like employment wearing a contract's clothes, take advice, since a labour-only worker is generally still owed super by whoever engages them.

If you are both in the one year

A wage job for one firm alongside invoiced work for another is an everyday pattern in plumbing, and the trick is to wall the two off from each other. Keep your wages and the employee deductions from this guide on one side. Keep the invoiced income and its business deductions on the other. Two tidy record sets, so at lodgement neither bleeds into the other.

The records differ too

Either way, the move that pays off is capturing each cost the moment it lands, not rebuilding the year from scratch in July. What you file away, though, isn't the same on both sides.

Either side, the ATO's own myDeductions app will hold the basics.

The bottom line

Sort out your status before anything else, because it drives the rest. Read the money: withheld tax and super paid in put you in the employee column, where this guide sets your work costs against your wages. Invoices off your own ABN put you in business, with broader deductions and, beyond the threshold, GST and a BAS to run, which is accountant work rather than anything this guide or PFO takes on. Get that one call right and every hour on your tax goes where it counts, instead of untangling a problem that was never yours.

General information only, not tax advice. Check the ATO or a registered tax agent for your situation.