OEM SUPPLIES PTY LTD v FC of T
Members: JW Constance DP
Tribunal:
Administrative Appeals Tribunal, Sydney
MEDIA NEUTRAL CITATION:
2015 ATC 10-400
J W Constance (Deputy President)
INTRODUCTION
1. OEM Supplies Pty Ltd is seeking a review of an objection decision relating to superannuation guarantee default assessments which were issued by the Commissioner of Taxation to the Company. These assessments were for the quarters ended 30 September 2007 to 31 March 2012 inclusive.
2. The default assessments were issued on the determination of the Commissioner that the Company had not met its superannuation guarantee obligations in respect of Mr Hunt who the Commissioner found to be an employee of the Company between 1 July 2007 and 31 March 2012.
3. Mr Hunt provided services to the Company during the period in question. The Company claims that he was engaged as an
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independent contractor. No superannuation payments were made for the benefit Mr Hunt by the Company.4. The objection to the assessments was allowed in part. The Commissioner found that the assessments did not correctly calculate Mr Hunt's earnings during the relevant periods for the purpose of determining the amount of superannuation guarantee charge payable by the Company. However, the objection decision affirmed that Mr Hunt was an employee during the relevant period.
5. For the reasons which follow, I am satisfied that Mr Hunt was not an employee of the Company at any time during the relevant period. Accordingly, the decision under review will be will be set aside and the matter will be remitted to the Commissioner for reconsideration in accordance with this finding.
LEGISLATION
6. A superannuation guarantee charge is imposed by the Commissioner in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth). Read with the Superannuation Guarantee Charge Act 1992 (Cth), it imposes a superannuation guarantee charge on employers who fail to pay superannuation contributions in respect of their employees.
7. The superannuation guarantee charge, in accordance with section 17 of the Administration Act, consists of the total of an employer's individual superannuation guarantee shortfalls for a quarter, along with a component related to nominal interest and administration. The shortfall is calculated by reference to the "salary or wages" of the employee.
8. Once a charge is paid, the Commissioner pays the outstanding superannuation contributions to the employee.
9. Section 12 of the Superannuation Guarantee (Administration) Act 1992 (Cth) defines "employer" and "employee" as having their ordinary meanings. It provides in part:
(1) Subject to this section, in this Act, employee and employer have their ordinary meaning. However, for the purposes of this Act, subsections (2) to (11):
(a) expand the meaning of those terms; and
(b) make particular provision to avoid doubt as to the status of certain persons.
…
(3) If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.
…
10. The ordinary meaning of the word employee will be considered in detail later in these reasons. It is important to note at this stage that subsection 12(3) operates to extend the ordinary meaning.
ISSUES
11. The issue for determination in this matter is whether Mr Hunt was an employee of the Company during the quarters ended 30 September 2007 through to 31 March 2012 inclusive. This requires the determination of the questions which follow.
- (1) Was Mr Hunt an employee of the Company in the ordinary meaning of the word (as required in subsection 12(1) of the Administration Act)?
- (2) Was Mr Hunt an employee of the Company pursuant to the extended meaning in subsection 12(3) of the Administration Act?
12. In accordance with section 14ZZK of the Taxation Administration Act 1953 (Cth), the onus is on the Applicant to establish that Mr Hunt was not an employee and therefore that the assessment requiring payment of the superannuation guarantee charge was incorrect.
EVIDENCE
Evidence of Ms Seaton
13. Ms Seaton is a Managing Director of the company. She provided a statutory declaration dated 10 April 2015,[1]
14.
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Mr Hunt was employed as a clerk by the Company in the early 2000's. He was paid all the usual employee benefits including superannuation. Mr Hunt voluntarily resigned from this position.15. In 2005, Mr Hunt approached Ms Seaton with a proposal that he be engaged to build a website for the Company.
16. In a letter dated 9 December 2005,[3]
That Denis Hunt will build and maintain websites for EOM Supplies Pty Ltd. As well, he will promote the websites in the marketplace with the objective of bringing in business via the websites.
The letter proceeded to specify that Mr Hunt would work to set up facilities for online purchasing, conduct routine maintenance of the sites once established, and market the sites by "tuning the sites for browsers, marketing the sites to existing clients, bringing in business via the websites".
17. Under the heading "remuneration" it was stated that:
Denis Hunt will no longer charge an hourly rate for his services. Instead, his remuneration will directly depend on the success of the websites in bringing in business. He will be paid an agreed commission on online sales.
18. The Company engaged Mr Hunt to build and maintain a website on the basis proposed. This was completed in about 2006. After its completion, Mr Hunt was responsible for its maintenance.
19. Ms Seaton denied that in a conversation in 2007 between herself, Mr Hunt and Mr Keir, the Sales Manager of the Company, it was agreed that Mr Hunt would be employed as a full-time salesman by the Company. She stated that Mr Hunt was asked to advance the Company's business with a major supermarket chain. This was to be done "purely" through the website. He was not engaged to solicit telephone sales for the Company.
20. Mr Hunt was paid a monthly fee as well as commission. The monthly fee of $1000 was paid for his work in maintaining the website and ensuring the online pricing was correct. He was also paid an annual bonus of $1500. This bonus was not dependent on performance.
21. In addition to the monthly fee, it was agreed between the Company and Mr Hunt that he would be paid commission of 30 per cent of the profit on all the Company's sales to the supermarket chain. As to the amount of 30 per cent, Ms Seaton said that this was an estimate on the amount of business that was being generated through the website. At the time, she had no means of knowing exactly what business the website brought in.
22. Mr Hunt also designed promotional products which the Company provided to the supermarket chain. He was not paid an additional amount for this work.
23. After the Company moved its premises from Ultimo in the city to Castle Hill in late 2007, Mr Hunt was reimbursed his expenses for road tolls and petrol. He was also given a mobile phone by the Company, which paid for the plan.
24. Mr Hunt was given a company shirt at his own request and had business cards bearing the Company logo as this "made it easier to go to the printers".
25. When asked whether it would appear to customers that Mr Hunt worked for the Company, Ms Seaton agreed. She stated that the Company "wanted it that way" but that this only occurred during an annual trade show at which the Company was represented. Mr Hunt was not required to attend the trade shows but chose to do so. She was happy for him to attend as it gave him the opportunity to liaise with customers concerning the promotional products that the Company provided. Mr Hunt was paid 30 per cent of all profits derived from these shows.
26. When Mr Hunt was away, the commission and retainer were still paid. No-one at the Company covered Mr Hunt's work on the website in his absence.
27. At times Mr Hunt engaged a programmer named Justin to assist him in working on the website. Ms Seaton never met this person and believes that he was paid by Mr Hunt.
28.
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Mr Hunt advertised his own business on the Company's website and handed out his own business cards to customers and suppliers.29. Mr Hunt did not attend the Company's premises for the same hours as the Company's employees and did not regularly attend the premises, particularly after the Company moved to Castle Hill. When attending the business premises, Mr Hunt would occupy a desk with a phone and computer. This was common practice as there were a number of spare desks which were used from time to time by employees visiting from inter-state and by other contractors.
30. At Ultimo, Mr Hunt did not regularly attend the office and did not work at the office from 8:30am to 5pm. He was not employed as a salesperson and was not involved in calling clients over the telephone in an effort to elicit sales. After the move to Castle Hill, Mr Hunt continued to work as before, except that he attended the office less frequently.
Evidence of Mr Hunt
31. Mr Hunt provided a statement, dated 19 November 2014,[4]
32. Mr Hunt was employed by the Company for approximately 18 months in 1988 - 1989.
33. Sometime in 2005, following a conversation with Ms Seaton, Mr Hunt was engaged by the Company to build a website. He spent approximately 12 months on this task. As part of the work, he engaged and paid a programmer to assist him in creating the website. Otherwise, he performed the work himself. He worked from home using his own computer and invoiced the Company for the work he carried out under the business name DENIS G. HUNT Editorial and Design.
34. Once the website had been completed Mr Hunt continued to maintain it for the Company and invoiced the Company for this work. Again he worked mainly from home using his own computer.
35. Mr Hunt described the conversation between Ms Seaton, Mr Keir and himself in 2007 as follows:
Some time in 2007, Craig Keir, the sales manager for OEM, spoke to me about working for OEM. I went to meet Craig and Yvette Seaton at a coffee shop near the OEM office to discuss this. At that time, OEM'S Sydney office was in Ultimo. From the conversation I understood that OEM had a man called Tom, working full-time in the office doing telephone sales, who was leaving. We discussed me coming to work at OEM to replace Tom.[5]
Exhibit R3.
36. Shortly after this conversation Mr Hunt commenced working for the Company as a salesman on a full-time basis. He was not asked to sign a contract. He says that Ms Seaton said to him "just keep doing what you're currently doing and invoice me".[6]
37. When he commenced working for the Company he was given the title National Manager of Online Marketing and Sales. At that time, the Company's business was mainly the sale of printers, toners and ink. His role was to service existing customers and to develop new business.
Evidence of Mr Keir
38. Mr Keir provided a statutory declaration dated 16 October 2014,[7]
39. In his statutory declaration, Mr Keir stated:
I am employed by OEM Supplies Pty Ltd as the NSW Sales Manager. During the time that Denis Hunt was working at OEM Supplies Pty Ltd he clearly indicated to me that OEM Supplies Pty Ltd was only one of several businesses that he was providing consulting services to.
It is my definite recollection that this situation was made clear to me by him on many occasions.
I can further state that, as the NSW Sales Manager, I had no authority over Denis Hunt's movements or his work practices. Denis Hunt made it very clear that he was quite independent of me.
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Documents
40. Copies of some of the invoices issued by Mr Hunt under the business name DENIS G. HUNT Editorial and Design show that the Company was invoiced for:
- • $485 for "Website upgrade" on 7 September 2007;[8]
Exhibit R1, p. 78. - • $1,500 for "routine maintenance of the websites www.oemsupplies.com.au and www.q-shop.com.au 01 January 2007 to 31 December 2007" on 4 January 2008;[9]
Exhibit R1, p. 82. - • $1,500 for "ongoing maintenance and support of the websites www.oemsupplies.com.au and www.q-shop.com.au 01 January 2008 to 31 December 2008" on 31 December 2008;[10]
Exhibit R1, p. 106. - • $1,500 for "ongoing maintenance and support of the websites www.oemsupplies.com.au and www.q-shop.com.au 01 January 2009 to 31 December 2009" on 31 December 2009;[11]
Exhibit R1, p. 133.
The Commissioner accepts that the Company is not required to pay a superannuation guarantee charge in respect of these amounts as they relate to Mr Hunt's work for the Company to build and maintain its websites.[12]
41. The invoices rendered by Mr Hunt between 1 July 2007 and 31 March 2012[13]
PRINCIPLES TO BE APPLIED
42. In On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No3)[14]
43. Guided by what the Court said in its judgement the following principles are relevant.
- (1) It is necessary to look to "the real substance of the relationship in question."
- (2) In analysing the nature of the relationship, identify:
- ∘ the parties;
- ∘ their role and function; and
- ∘ the nature of the interactions which constitute their relations.
- (3) The modern approach to distinguishing an employee from an independent contractor is "multi-factorial" rather than concentrating on the degree of control exercised by the putative employer.
- (4) An independent contractor provides personal services to another business whilst working in and for his or her own business whereas an employee provides such services whilst working in the employer's business.
- (5) Indicia of a business include:
- ∘ Economic activities involve the taking of risk:
- ∘ Engagement in a repetitive and continuous manner with purchasers of its services;
- ∘ Employment or engagement of other persons;
- ∘ The creation of goodwill by economic activity;
- ∘ Promotion as a business through advertising or other promotional means;
- ∘ The existence of tangible assets;
- ∘ The existence of basic transactional systems that are common to a business of its kind;
- ∘ The provision of labour of sufficient skill to be suggestive of the pursuit of a profession or trade.
44. The Court set out two elements to be considered.
- • Is there a commercial enterprise being conducted as a going concern?
- • If so, in whose business is the economic activity being performed?
45. In considering these elements, I note what the Full Court of the Federal Court said in
Tattsbet Limited v Morrow:[15]
As Buchanan put it in ACE Insurance, "[w]orking in the business of another is not inconsistent with working in a business of one's own". On the other hand,
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if the putative employee's circumstances exhibit the characteristics of a business, that will undoubtedly be a matter proper to be taken into account in determining the question at hand, so long as sight is not lost of the question itself. The question is not whether the person is an entrepreneur: it is whether he or she is an employee.
ISSUE 1: WAS MR HUNT AN "EMPLOYEE" OF THE COMPANY WITHIN THE ORDINARY MEANING OF THE WORD IN ACCORDANCE WITH SUBSECTION 12(1) OF THE ACT?
46. Having considered the evidence of Ms Seaton, Mr Keir and Mr Hunt, and having observed each of them give evidence, I prefer the evidence of Ms Seaton and Mr Keir to that of Mr Hunt. I am not satisfied that Mr Hunt's recollection of events in the period 2007 to 2012 was accurate, particularly his evidence in relation to his claim that he was employed full-time as a telephone salesman. Mr Hunt claimed that he was allocated a customer base of between one hundred and two hundred customers by Ms Seaton. When asked to name some of these customers he had difficulty in so doing and could only recall "a jewellery broker in Pyrmont" and "a printer in Ultimo". He was able to provide the name of one customer after consulting his mobile phone. In contrast, both Ms Seaton and Mr Keir appeared confident in giving their evidence.
47. Further, Mr Hunt was unable to satisfactorily explain why he did not seek to have PAYE tax deducted from his earnings. His statement that he thought he was a contractor was inconsistent with his claim that it was agreed that he would be employed as a full-time salesman. Mr Hunt had been employed previously by the Company on a full-time basis and PAYE tax had been deducted.
The parties, their role, function and interactions
48. I am satisfied that in 2007, Ms Seaton, acting on behalf of the Company, and Mr Hunt made a verbal agreement. The essential terms of that agreement were:
- • Mr Hunt would continue to maintain the Company's website as he had done previously;
- • he would do the necessary work to maintain pricing data on the website;
- • he would provide designs for Company promotional work as required;
- • he would be paid $1000.00 per month plus an annual payment of $1500.00 to maintain the website;
- • he would be paid a commission equal to 30% of the gross profit on internet sales.
49. Based on the evidence of Ms Seaton and Mr Keir, I am satisfied that it was not agreed that Mr Hunt be employed as a full-time salesman. Further, I am satisfied on the basis of that evidence that at no time between 1 July 2007 and 31 March 2012 did Mr Hunt provide services as a salesman to the Company other than those services relating to sales achieved by means of the website.
50. In view of this finding it is only necessary to consider whether Mr Hunt was an employee of the Company in performing roles other than as a full-time salesman.
The first element - Is there a commercial enterprise being conducted as a going concern?
Economic activities involving the taking of risk
51. While the evidence is unclear as to the exact nature of the work done by Mr Hunt in return for the payment of commission, I am satisfied that the financial benefit he obtained was linked to the success or otherwise of the website and pricing mechanisms designed by him. To this extent, he was taking an economic risk.
52. The payment of a commission was a continuation of an arrangement proposed by Mr Hunt in a letter dated 9 December 2005.[16]
53. Further, based on what he told Ms Seaton and Mr Keir, I am satisfied that Mr Hunt provided website services to other businesses at the same time as he was providing those services to the Company. In doing so he was
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taking the economic risk that he would be able to recover an adequate return for the provision of these services.Engagement in a repetitive and continuous manner with the purchasers of the services provided by the business
54. It is not in dispute that Mr Hunt engaged in a repetitive and continuous manner with the Company for a period of approximately five years, I am not satisfied that he engaged in similar activity with any other business which engaged his services during this time.
Employment or engagement of other persons
55. Mr Hunt agreed that at times he would engage a person known as Justin to assist him in maintaining the website and that he would pay Justin himself. I accept Ms Seaton's evidence that she was aware of this arrangement and that she had never met Justin. I also accept her evidence that Mr Hunt engaged other consultants to assist him in maintaining the Company's website.
The creation of goodwill by economic activity
56. There is no direct evidence to indicate that Mr Hunt created goodwill in a business operated by him.
Promotion as a business through advertising or other promotional means
57. In the letter of 9 December 2005, Mr Hunt wrote to Ms Seaton and another Director of the Company proposing that he provide various services in respect of the Company's website.[17]
58. Mr Hunt included a footer on the Company's website stating that the site had been designed and built by Denis G Hunt Editorial & Design. Mr Hunt's recollection was that there was a link from the Company's website to his own website.
The existence of tangible assets
59. At times Mr Hunt worked from his own premises (a home office) using his own computer and other office equipment. When he worked in the Company's office he was provided with a desk and a telephone; he used his own laptop. Mr Hunt required minimal tangible assets, whether he was working from home or from the Company's premises. The Company contributed to his mobile phone.
The existence of basic transactional systems
60. Mr Hunt invoiced the Company for his services (including the commission) on a document headed DENIS G. HUNT Editorial and Design and gave an Australian Business Number.[18]
This business operates on a fee for service basis.
Credit is not offered
Please pay on this invoice.
A statement will not be issued.
A website, telephone contacts and an email address were provided.
The provision of labour of sufficient skill to be suggestive of the pursuit of a profession or trade
61. Mr Hunt had the skills necessary to build and maintain a website and engaged others with similar skills to assist him.
The relevant factors point to the conduct of a business
62. Apart from the lack of evidence that Mr Hunt had built up goodwill, the above factors point to the operation of a business. Of particular weight is the evidence as to the taking of risk, the engagement of others to assist with the work being undertaken, the promotion of a business, and the existence of basic transactional systems.
The second element - Whose business is the economic activity being performed in and for?
63. In the On Call Interpreters judgement,[19]
The opportunity for profit/loss
64. In the payment of commission based on sales achieved through the website and the payment of an agreed amount for the maintenance of the website, there was opportunity for Mr Hunt to increase the profit
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he made by working more efficiently. I am satisfied on the evidence of Mr Hunt, Ms Seaton and Mr Keir that Mr Hunt was free to do the tasks required of him in whatever manner he saw fit, including the engagement of others. Unlike an employee who devises a more efficient method of working, in Mr Hunt's situation the financial profit or loss arising from any change in his work practices would accrue to him, not the Company.Control and direction of the manner in which the economic activity is carried out
65. In Stevens v Brodribb Sawmilling Company Pty Ltd,[20]
A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it (Zuijs v. Wirth Brothers Pty Ltd; Federal Commissioner of Taxation v. Barrett; Humberstone v. Northern Timber Mills). In the last-mentioned case Dixon J. said:
"The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions."
66. Mr Keir, the Company's NSW Sales Manager, said that he had no authority over Mr Hunt's movements or his work practices and that Mr Hunt made it "very clear" that he was quite independent of him.[21]
67. After the Company moved its business premises from Ultimo to Castle Hill in late 2007, Mr Hunt commenced working from home and did not attend the Company's office as regularly as he had done previously. It was his decision whether he worked at home or in the Company's office.[22]
68. On occasions, Mr Hunt attended to activities other than his work for the Company in ordinary business hours. He took time to engage in a whale watching business, although he said that he was contactable by telephone during those times. Government records indicate that Mr Hunt had the trading name "Whalepics" registered from July 2009 and "DENIS HUNT ADVENTURE TOURS" registered from 2002.[23]
69. Mr Hunt made a trip to South Africa in 2009 for a month and did some sessional teaching at the University of Western Sydney in 2007. During these periods, including when he was engaged in his whale watching activities, Mr Hunt continued to receive payment of commission and his monthly retainer.
70. Mr Hunt said that he informed Ms Seaton of his absences, but I am satisfied that the company did not exercise control over when or for how long Mr Hunt would absent himself from his work for the Company.
71. I am satisfied that the Company did not control, and did not have the authority to control, the manner in which Mr Hunt maintained the website or entered the pricing information on an ongoing basis.
How was the economic activity portrayed - as the activity of the Company or as the activity of Mr Hunt?
72. At times Mr Hunt's activities were portrayed to the public as being activities on behalf of the Company.
73. In 2007, the Company provided Mr Hunt and other staff members with shirts bearing the company logo and Company business cards for an annual trade show. Mr Hunt chose to wear the shirt in the office on subsequent occasions. Ms Seaton wished to give customers at the trade show the impression that Mr Hunt worked for the Company. Mr Hunt was paid a commission of 30% of the profit on sales negotiated at the trade show.
74. Apart from the activity referred to in the preceding paragraph, I am satisfied that the economic activity of Mr Hunt in maintaining the website and entering the pricing information
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was not portrayed as activity of the Company. The business of the latter was primarily the sale of printers and related products.To what extent was Mr Hunt integrated with the Company's business?
75. On the basis of the evidence of Mr Hunt, I am satisfied that he was not integrated with the Company's business to the same extent as other employees. From the time the Company moved its premises to Castle Hill, Mr Hunt chose not to attend the office as he had done previously, but to work from his home for at least part of the week. His absences from the office when he was engaged in other activities demonstrate a flexibility in the requirements for his attendance not normally afforded to full-time employees.
To what extent was Mr Hunt financially self-reliant from, as opposed to, economically dependent upon or organisationally tied to, the Company's business?
76. The evidence available is insufficient to determine the extent of the economic dependence of Mr Hunt upon the Company's business. However, on the basis of the evidence of Ms Seaton and Mr Kier, I am satisfied that Mr Hunt was not organisationally tied to the Company. I am satisfied that he was able to determine his hours of attendance at the Company premises and that he worked without supervision. He was free to, and did, engage others to assist him in the tasks he performed for the business.
Was Mr Hunt free to employ his or her own means (employees or contracted agents) to produce the activity or must he have personally performed the work?
77. As I have already found, Mr Hunt was free to employ others to assist him. He employed and paid at least one person to assist him with the building of the web site.
To whose business did any goodwill created by the activity enure?
78. There is insufficient evidence to answer this question.
In contracting to provide the economic activity, did Mr Hunt agree to provide an outcome or result?
79. On the basis of the evidence of Ms Seaton and Mr Hunt, I am satisfied that Mr Hunt agreed to provide an outcome for the Company. He agreed to maintain the website and to ensure that the pricing information was up-to-date on an ongoing basis. He determined how this outcome was to be achieved.
To what extent did Mr Hunt use his own equipment?
80. I accept Ms Seaton's evidence that when he was in the Company's office, Mr Hunt was provided with a desk and a chair and had access to a computer. However, he usually used his own laptop when working in the office.
81. On the basis of Mr Hunt's evidence, I am satisfied that when he worked from home he used his own equipment, apart from the mobile phone paid for by the Company.
To what extent could Mr Hunt be directed in the management and control of his own equipment?
82. On the basis of the evidence of Ms Seaton and Mr Hunt, I am satisfied that the agreement between the Company and Mr Hunt did not permit anyone on behalf of the company to direct the management and/or control of that equipment.
Did the parties characterise the economic activity as that of Mr Hunt being performed in and for his business, or alternatively as part of the Company's business, and to what extent did that characterisation reflect reality?
83. I am satisfied that both parties characterised, and intended, that the economic activity performed by Mr Hunt was performed in and for his own business. It was intended that that activity would provide an operating website for the Company's business.
84. Ms Seaton did not regard, nor treat, Mr Hunt as an employee. The Company did not deduct PAYE tax nor pay superannuation. I am satisfied the decision not to meet the legal obligations which arise from an employer/employee relationship was made as a result of Ms Seaton's genuine belief that no such relationship existed and not from any desire to avoid the legal responsibilities of employment.
85. Mr Hunt said that he accepted that his relationship with the Company was that of an independent contractor from 2005 onwards. He invoiced the Company for services provided by his business. He did not discuss any entitlement
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to annual leave, sick leave or superannuation. He did not submit to the Company any documentation in relation to the deduction of PAYE tax. He went on only one holiday (apart from taking public holidays) during the period from 2007 until 2012. This was for a period of four weeks in 2009. He did not seek payment for accrued annual leave on cessation of the engagement. It was not until 2011, after his accountant questioned the status of the relationship, that he began to reconsider the situation. He said that, until that time, he believed he was an independent contractor.[24]86. In view of the documentation to which I have referred, and the lack of control of Mr Hunt's activity by the Company, I am satisfied that the characterisation placed on the relationship by the parties was reflected by reality.
Consideration of the various elements
87. Although I have referred to the evidence relating to the various elements set out in the judgement in the On Call Interpreters case, it is important that these elements be considered as part of the total picture and not simply as a check list.
88. In On Call Interpreters, the Court said:[25]
The indicia which I have listed reflect various indicators largely taken from the decided cases. In many respects the indicators are differently expressed to accommodate the particular approach that I have taken which, consistently with the approach in Hollis, seeks to emphasise what I have described as the central question in the application of the totality test. The indicators listed are not intended as exhaustive and many of them will be the subject of qualification depending upon the nature of the economic activity in question and the circumstances in which it is being carried out. The task to be undertaken is not to be performed mechanically by checking off against a list of indicia and without recognising that different significance may attach to the same indicators in different cases:
Lopez v Deputy Commissioner of Taxation [2005] FCAFC 157 at [82].
89. Considering the totality of the evidence I am satisfied that Mr Hunt was not an employee of the Company at any time between 1 July 2007 and 31 March 2012. The economic activity performed by Mr Hunt was performed in his own business operating under the business name DENIS G. HUNT Editorial and Design. It was this business activity which provided the outcome required by the Company, namely the maintenance and updating of its website.
90. I accept that some of the factors considered do point to an employer/employee relationship. In particular the issuing of business cards to Mr Hunt suggesting that he was a member of staff, and his representing at the trade shows that he was so employed, may indicate a relationship of employment.
91. Nevertheless, the relationship between the Company and Mr Hunt was characterised by several fundamental features which are not suggestive of a relationship of employment. The lack of control by the Company as to how the agreed work was to be carried out, the limited integration into the company's business as highlighted by the flexibility afforded to Mr Hunt in relation to his times and manner of working, and his ability to employ others to assist him, are extremely significant in this regard.
92. In my view, taking into account all of the circumstances of the relationship, Mr Hunt cannot be regarded as having been the "employee" of the Company, in accordance with the ordinary meaning of the word, at any time between 1 July 2007 and 31 March 2012.
ISSUE 2: WAS MR HUNT AN EMPLOYEE OF THE COMPANY IN ACCORDANCE WITH SUBSECTION 12(3) OF THE ACT?
93. As previously noted, subsection 12(3) provides:
(3) If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.
94. The application of this subsection was considered in the On Call Interpreters judgement. The Court stated that although the words of the subsection are potentially wide and clearly extend to persons who provide personal services who are not employees at common law, the words must be construed in
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context and by reference to the evident purpose of the Act. The Court found that:[26]… Parliament was concerned with promoting and enhancing the provision of occupational superannuation by employers to their employees …… The sub-section seeks to facilitate occupational superannuation being paid out of the exchange of work for remuneration when an independent contractor provides personal services in an employment-like setting which is not of a domestic or private nature (see s 12(11)). Whether an employment-like setting exists may be best answered by asking: Whether, in all the circumstances, the labour component of the contract in question could have been provided by the recipient of the labour employing an employee?
95. The Federal Court concluded that subsection 12(3) "only applies in relation to contracts for the personal performance of work by the worker who is a party to the contract."[27]
96. Based on the evidence of Mr Hunt and Ms Seaton, I am satisfied that that the contract between Mr Hunt and the Company was not "wholly or principally" for the labour of Mr Hunt.
97. As I have previously found, the Company required an outcome and was not concerned with directing Mr Hunt as to the means by which that outcome was achieved. Importantly, applying the test set out above, Mr Hunt was free to employ others to assist him in carrying out the necessary work and did so. I am satisfied Ms Seaton was aware of this and agreed to it on behalf of the Company.
98. For these reasons, I am satisfied that Mr Hunt was not an "employee" of the Company within the meaning of subsection 12(3) of the Act.
CONCLUSION
99. As I have decided that Mr Hunt was neither an employee of the Company at common law nor within the meaning of subsection 12(3) of the Superannuation Guarantee (Administration) Act 1992 (Cth), the objection decision (reference number 1012557681833) made by the Commissioner of Taxation will be set aside.
100. The matter will be remitted to the Commissioner of Taxation for reconsideration in accordance with these reasons for decision.
Footnotes
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