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Edited version of administratively binding advice
Authorisation Number: 1012527708676
Ruling
Subject: Superannuation guarantee
Superannuation Guarantee - Section 12(11) of the SGAA: work of a private or domestic nature
Question
Is there an obligation to pay superannuation contributions under the Superannuation Guarantee (Administration) Act 1992 (SGAA) for an individual who provides domestic support services if they work more than 30 hours per week and are paid $450 or more in a month?
Advice
Yes. Please see 'Explanation' below.
This advice applies for the following period:
1 July 2013 - 30 June 2017
Relevant facts and circumstances
Your advice is based on the facts stated in the description of the scheme that is set out below. If your circumstances are significantly different from these facts, this advice has no effect and you cannot rely on it. The fact sheet has more information about relying on ATO advice.
· The Commissioner received an application in respect of superannuation guarantee (SG) obligations for individuals engaged to provide work of a private and domestic nature.
· Funding support payments are received from a government body.
· Individuals are engaged to provide care support on an as need basis.
· The individuals are paid by way of an hourly rate.
· The number of hours where an individual may be required varies depending upon the situation.
· The support is typically provided by transient workers, such as backpackers, and the length of time that a particular individual will be involved can vary, but is typically up to 6 months.
· The support provided by the individual will also vary depending upon the time of day that care is required.
· The legal guardian makes the payments to the individuals.
· The individual provides a 'Statement by Supplier' declaration such that tax is not withheld on the payments made.
· The individuals are not professional care workers.
Relevant legislative provisions
Superannuation Guarantee (Administration) Act 1992 Section 11
Superannuation Guarantee (Administration) Act 1992 Section 12
Reasons for decision
Summary
SG contributions are payable to an individual who performs work that is wholly or principally of a domestic or private nature, and is performed for more than 30 hours per week.
Detailed reasoning
Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages' discusses payment of 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 Superannuation guarantee: Who is an employee? 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.
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.
To be considered private or domestic in nature the wages would need to be paid by an individual or by a legal guardian on an individual's behalf.
Application to your circumstances
Individual's are engaged to provide care support on an as needed basis and are paid an hourly rate. The duties vary depending on the time of day that care is required these duties typically include work of a private and domestic nature.
As stated above the ATO view 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.
Payment of the hourly rate is made by a legal guardian to the individuals engaged. Based on the facts as provided the individual engaged as a support worker is considered to be an employee for SG purposes.
In conclusion of the facts presented, SG contributions are required to be made to a complying superannuation fund or retirement savings account on behalf of an individual who provides domestic support services if they work more than 30 hours per week.
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