Edited version of administratively binding advice

Authorisation Number: 1011663858083

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Advice

Subject: Superannuation Guarantee Administratively Binding Advice

Question

Does the organisation have an obligation to pay superannuation guarantee for a housekeeper?

Advice

Yes, the work performed by the housekeeper does not satisfy the exemption set out in subsection 11(2) of the Superannuation Guarantee (Administration) Act 1992 (SGAA). Please see 'Reasons for decision'.

This ruling applies for the following periods

Periods commencing from 1 April 2004

The scheme commences on

1 April 2004.

Relevant facts and circumstances

Your advice is based on the following facts.

· The organisation is a non-profit organisation .

· A housekeeper is employed to cook some meals and to attend to domestic cleaning and other household duties for the parish priest. There is usually only one person in attendance.

· The housekeeper only works for a few hours each week, the most hours worked in a week has been less than 30 hours.

· Payment is on an hourly basis.

· In some months payments made were in excess of $450.

· Wages paid to the housekeeper are paid from an account that is in the name of the organisation, not the individual.

Relevant legislative provisions

Superannuation Guarantee (Administration) Act 1992 11(2),

Superannuation Guarantee (Administration) Act 1992 12(11) and

Superannuation Guarantee (Administration) Act 1992 27(2).

Reasons for decision

Summary

The organisation has requested advice on whether an individual who performs work of a domestic or private nature, for 30 hours per week or less satisfies the exemption set out in subsection 11(2) of the SGAA. The worker is paid from the organisation bank account.

Detailed reasoning

Superannuation Guarantee Ruling SGR 2009/2 discusses payment of superannuation guarantee (SG) based on ordinary time earnings (OTE) and salary and wages (S&W). In relation to work that is wholly or principally of a private or domestic nature, paragraph 57 of SGR 2009/2 states:

Remuneration under a contract for the employment of a person, for not more than 30 hours per week, in work that is wholly or principally of a private or domestic nature is excluded under subsection 11(2). Work of a private or domestic nature means work relating personally to the individual making payment for the work or work relating to the person's home, household affairs or family organisation.

Subsection 11(2) of the SGAA states:

Remuneration under a contract for the employment of a person, for not more than 30 hours per week, in work that is wholly or principally of a domestic or private nature is not to be taken into account as salary or wages for the purposes of this Act.

Superannuation Guarantee Ruling SGR 2005/1 goes on to further define the meaning of work of a domestic or private nature in paragraphs 93 to 98:

93. Subsection 12(11) of the SGAA provides that a person who is paid to do work wholly or principally of a domestic or private nature for not more than 30 hours per week is not an employee in relation to that work. A person who is paid to do work of this nature for more than 30 hours per week may or may not be an employee depending on whether they fall within the other provisions of section 12, as discussed above.

94. The terms 'private' and 'domestic' are not defined in the SGAA so it is necessary to refer to the ordinary meaning of the words.

95. The Macquarie Dictionary (third edition) defines 'domestic' to mean 'of or relating to the home, the household or household affairs' and 'private' to mean 'belonging to oneself', 'being one's own', 'individual or personal'.

96. In (1955) 5 CTBR (NS) Case 50 at 332, the Board of Review defined 'private or domestic' expenditure (under subsection 51(1) of the ITAA 1936) as:

... losses or outgoings of a private nature we take to mean here losses or outgoings relating solely to the person incurring them ... e.g., travelling expenses incurred by a person to and from his place of employment.... Losses or outgoings of a domestic nature we take to mean here losses or outgoings which relate solely to the house, home or family organisation, of the person incurring them....

97. Although this case was about losses or outgoings of a private nature we think it also illustrates the similar concept of work of a domestic or private nature. In our view, work of a domestic or private nature ordinarily means work relating personally to the individual making payment for the work or to the person's home, household affairs or family organisation.

98. For example, people employed by someone to clean their home, to mind their children, to effect repairs or maintenance of their home, or to tend their home garden would be engaged in domestic or private work. If they worked for that person for not more than 30 hours a week, they would not be that person's employee under the SGAA.

It is contended that even though the employee's wages were not personally paid by the parish priest from resources of their own, it was believed the housekeeper was paid by the organisation to carry out domestic duties on their behalf and would therefore qualify as an exempt employee for SG purposes.

As the wages are paid from the organisation bank account, as stated in the facts, the work carried out by the housekeeper is not considered to be work of a private or domestic nature. To be considered private or domestic in nature the wages would need to be paid by the individual.

The terms private and domestic are not defined in the SGAA. The ATO view is contained in paragraph 97 of SGR 2005/1, which states that work of a domestic or private nature ordinarily means work relating personally to the individual making payment for the work or to the person's home, household affairs or family organisation.

As such, the housekeeper is considered an employee of the organisation. Any SG owing for the current quarter or a quarter for which the due date has not yet passed will need to be paid to the employee's superannuation fund, or an account be opened in the event the employee does not currently have an applicable fund. The due date for the payment of SG for a quarter is 28 days after the end of the quarter.

Any SG owed for previous quarters will need to be paid to the ATO, accompanied with a completed superannuation guarantee charge (SGC) statement.

However, subsection 27(2) of the SGAA advises that if an employer pays an employee less than $450 by way of salary and wages in a month, the amounts are not taken into account when calculating the SGC. Only those months where the employee was paid in excess of $450 will need to be used to calculate the SGC.

Any SGC payments will not have tax implications for the employee until their superannuation monies are eligible to be withdrawn.

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