ABSTRACT
In the absence of statutory definitions of terms used in modern statutes, common law judges will rely on longstanding meanings imported from long-established areas of common law, a phenomenon known as transplanted categories. A notable example in Commonwealth income tax and superannuation legislation is the transplantation of the common law definition of an employee from vicarious liability tort law into four areas of modern tax and superannuation law. The tests developed by the courts to distinguish employees from independent contractors in tort law, including control over the work process and a distinction between remuneration based on results or hours worked, have no correspondence with rationale for distinguishing employees from contractors in income tax or superannuation law. A review of the history of the incorporation of a tort law definition into income tax and superannuation law shows courts shied away from purposive interpretations that might have achieved the policy objectives of the distinction. The optimal reform path may be to abandon entirely a distinction based on the characterisation of a person providing personal labour services and instead legislate a simple formula that achieves directly the policy objective in the classification of individual service providers.
Allen, Christina and Krever, Richard, Who is an Employee? The Unfortunate Tax and Superannuation Legacy of a Transplanted Category (April 1, 2025).
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