A global EOR service helps your business by removing a calculation you cannot make with confidence: how much of what you pay a contractor is payment for their labour. Employ someone and the wage is the wage. Engage them on a contract and you owe the Australian Taxation Office a defensible answer to that split, invoice by invoice. We sell an Employer of Record product that removes the question, so weigh what follows accordingly.
Most founders with a small team abroad have never been asked for that answer.
The ATO has just finished asking how you split a contractor's invoice
The ATO's advice under development page, last updated 5 October 2026, carries draft determination SGD 2026/D1, on working out the labour component of a contract caught by subsection 12(3) of the Superannuation Guarantee (Administration) Act. It was published on 2 September and comments closed on 2 October. It would withdraw SGD 96/2, which continues to apply to periods ending on or before 30 June 2026.
Thirty years of settled practice, reopened in a consultation most employers never knew was running.
Grant Thornton's reading of the draft, published 10 September, shows the shape of it. A contractor invoices $1,500 for services performed, $300 for specialised equipment and $200 for materials, and super attaches to the $1,500. Send one undivided invoice for $2,000 and you must establish a reasonable method of your own for the labour share.
The obligation to apportion falls on you, not on the person who wrote the invoice.
What a global EOR service removes from your month
Under an employer of record the worker is employed, so there is no labour share to argue about. Ordinary time earnings are a payroll figure, the same calculation for every head in every country.
How much of a flat invoice is labour?
Nobody knows, which is the point. A flat monthly retainer is how most Australian businesses pay offshore contractors, and the worst document to defend a split from.
Does this reach a team working entirely overseas?
Often not. Residency and where the work physically happens decide whether super applies at all, and for a genuine non-resident working wholly abroad the answer is usually no. Apportionment is what you inherit the moment that first test goes against you.
The sum on three contractors
Three people on A$6,000 a month is A$216,000 a year. Apply the draft's own 75 per cent labour share and A$162,000 of that is qualifying earnings. At the super guarantee rate of 12 per cent for 2026-27, that is A$19,440 of super a year, or A$6,480 a head.
Outstaffer's published Employer of Record price is $250 per employee per month, so employing all three properly runs A$9,000 a year. The exposure on a single year of flat invoices is more than twice the annual cost of not carrying it.
The honest case against needing a global EOR service for this
It is a draft. SGD 96/2 still governs everything to 30 June 2026, and the final version may land softer. Most offshore contractors are foreign residents working entirely outside Australia and sit outside the super guarantee altogether.
And there is a cheaper fix than changing your employment model: tell your contractors to itemise. An invoice that separates labour from equipment and materials answers the question before the ATO asks it.
That is the strongest point against me, and it holds until a contractor's itemisation is the thing being audited rather than yours.
Related reading
- Why transitioning contractors to an EOR model benefits both sides in the Philippines
- Employer of record versus setting up your own entity
Where I would land, and the question I would ask first
Pull the last three invoices from every contractor you pay. If any is a single number with no line items, you have no defensible labour share and you never did. Five minutes, and it tells you whether this is your problem.
A global EOR service earns its fee at a business that cannot answer that question, and is poor value at one that can. We argued last week that the multi-country version of this question is the wrong one to ask a provider, and the same holds here. If the invoices come back clean, run one role through the platform and compare. Get advice on your own arrangement before acting on any of this.
What does your worst invoice look like?
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