Decision impact statement

Dominic B Fishing Pty Ltd and Commissioner of Taxation

Venue: Administrative Appeals Tribunal
Venue Reference No: 2013/3932-3934
Judge Name: Senior Member Bernard J McCabe
Judgment date: 10 April 2014
Appeals on foot: No
Decision Outcome: Unfavourable to the Commissioner

Impacted Advice

Relevant Rulings/Determinations:

• N/A

Subject References:
Superannuation guarantee
Employer contributions

Précis

Outlines the ATO's response to this case which concerns whether fishermen working on dories in a sharefishing arrangement with the owner of the main vessel are employees for the purposes of the Superannuation Guarantee (Administration) Act 1992 ('SGAA').

Brief summary of facts

From the quarter ended 30 September 2009 through to the quarter ended 30 June 2011 ('the period under review'), the taxpayer company operated a commercial fishing vessel out of a port in central Queensland.

The vessel, usually captained by the director of the taxpayer, would put out to sea for an average of ten days at a time. The captain would be joined by up to four crew members. While the vessel was at sea, the main vessel would anchor at a central spot each day and the fishermen would each board a small motorised boat called a 'dory'. The dories would head off to various locations within five nautical miles of the main vessel, where the crew members would spend all or part of the day fishing on their own and then return to the vessel.

Each fisherman would unload his catch and the details of the catch would be tallied by the captain and the fish would be stored. At the end of the voyage, when the vessel returned to port, the catch would be unloaded and delivered to a wholesaler or processor under the terms of a contract with the taxpayer. The taxpayer would pay the individual fisherman under the terms of the separate agreement between the taxpayer and each fisherman.

Each member of the crew of the taxpayer's vessel was provided a written document, headed '[Name of taxpayer] Joint Fishing Adventure', in advance of a voyage. The document provided:

a)

The parties were 'joint venturers' for the purposes of a single voyage;

b)

The cost of maintaining the vessel and associated operating costs was the responsibility of the Applicant but all parties would make a contribution towards these costs;

c)

Fish would be sold to a buyer at the end of voyage and parties were entitled to their share of the proceeds; and

d)

Each party would bear the cost of their own accident and illness insurance.

Mr Hemingway, a fisherman on the taxpayer's vessel, gave evidence which the Tribunal accepted that:

a)

He lived near the port where the taxpayer's vessel was based and if he needed work, he would make himself known at the port amongst the various vessels that were berthed there. The taxpayer and others who were preparing to go to sea and who required a crew might contact him and invite him to become a member of the crew for that voyage;

b)

He could bring his own equipment (such as hooks and lines) or equipment would be supplied;

c)

Dories were allocated at the start of the voyage and crew members knew they were responsible for cleaning their gear and their dory (failing to do so might result in a surcharge withheld from their final pay). Crew members could delegate the cleaning of their dory at the end of the voyage;

d)

He would obtain advances from the boat owner for cigarettes and other personal items, which would be deducted out of payment at the end of the voyage;

e)

He was not directed by the Applicant as to where or how to fish in the dory, subject to fisheries regulations; and

f)

He had an Australian Business Number (ABN) but had not filed income tax returns, nor kept any records or books which would be indicative of a business.

Evidence of both the director and Mr Hemingway, which was accepted, was:

a)

Decisions about where and when to fish would be made collectively between the skipper and the fishermen, with the skipper intervening only where safety was in issue;

b)

$2 per fish or per piece was deducted from the market price of the fish, and fishermen were then paid 30% or 32% of that price on the fish caught by that fisherman;

c)

Fishermen needed to hold a speedboat licence for the dories, but were not required to hold a commercial fisher's licence; and

d)

The parties agreed that there was no partnership relationship.

Issues decided by the court

Whether crew members on a commercial fishing vessel operated by the taxpayer were employees?

The Tribunal determined that the crew members fishing on dories were not employees, either according to the ordinary meaning of employee or under the extended definition contained in subsecton 12(3) of the SGAA.

The Tribunal relied on the recent Full Federal Court decision in ACE Insurance Limited v Trifunovski (2013) 209 FCR 146, which considered a right of control as an important factor in deciding whether an employee-employer relationship exists. The Tribunal placed particular reliance on its findings of fact that:

-

The terms of the contract contemplating a 'joint venture';

-

That the parties managed each voyage by consensus, which provided limited scope for the exercise of supervision and control;

-

That each fisherman was not directed where or how to fish when he was in his own dory (excepting limits imposed through regulations); and

-

That the fishermen brought their skills and some equipment to the 'venture' and the equipment provided by the taxpayer was effectively placed at the service of the 'joint venture'.

The Tribunal decided that the extended definition did not apply as the contract was not wholly or principally for the labour of the fishermen. Rather, the Tribunal considered that the agreement was a joint venture agreement intended to produce fish for sale and fishermen are remunerated on the basis of an outcome.

In its decision, the Tribunal also noted at [2] that:

"Fishermen and their advisers expect the decision will have implications for how they conduct their operations and engage their workforce. If they are looking for authoritative guidance, they will be disappointed. Each case turns on its own particular set of facts. One must examine the precise details of the engagement in each case in order to characterise it. Generalisations - whether by the industry and its advisers, or by the Commissioner - are impossible, which is as it should be."

ATO view of Decision

The Tribunal's view that the case is limited to its own facts and does not provide any authoritative guidance on cases concerning whether a worker is an employee for the purposes of the SGAA is consistent with the Commissioner's position.

In relation to the Tribunal's finding that the fishermen were in a joint venture with the taxpayer, the Commissioner did not have an opportunity to make submissions to the Tribunal about this issue in this case. The Commissioner will seek to make full submissions on this point in similar cases that arise in the future, with a view to further clarifying the issue of when a fisherman or fishermen is or is not in a joint venture with a boat owner.

Administrative Treatment

Implications for ATO precedential documents (Public Rulings & Determinations etc)

N/A

Implications on Law Administration Practice Statements

N/A

Court citation:
[2014] AATA 205 Related Rulings/Determinations:
SGR 2005/1 Superannuation guarantee: who is an employee?

Legislative References:
Superannuation Guarantee Administration Act 1992
Section 12

Case References:
Wiltshire v Kuenzli
(1945) 63 WN (NSW) 47

Hollis v Vabu Pty Ltd
(2001) 207 CLR 21
[2001] HCA 44
47 ATR 559
2001 ATC 4508

ACE Insurance Ltd v Trifunovski
(2013) 209 FCR 146
[2013] FCAFC 3