As an independent contractor you operate a business entity that produces a result for an agreed price. There are key differences between independent contractors and employees. In most cases you are an independent contractor if you:
Personal services income
In many cases, the income you receive for your work may be classified as personal services income (PSI). PSI is income that is mainly a reward for personal efforts or skills and is generally paid either to you as a contractor or to a personal services entity (a company, partnership or trust). In any one contract, if the majority (more than 50 per cent) of the income you derive from delivering services comes from the use of your skills, knowledge, expertise or efforts, rather than the materials supplied and/or tools and equipment you use to complete the job, then the income for the contract will be classified as PSI.