Edited version of your written advice

Authorisation Number: 1012741758312

Advice

Subject: Superannuation guarantee liability: work done outside Australia

Question

Will the salary or wage payments made by the employer to non-resident employees, meet the exclusion under paragraph 27(1)(b) of the Superannuation Guarantee (Administration) Act (SGAA)?

Advice

Yes , please refer to 'Reasons for decision'.

This advice applies for the following period:

1 July 2014 to 30 June 2016.

The arrangement commences on:

1 July 2014

Relevant facts and circumstances

The employees are non-resident employees and they hold Temporary Business (Long Stay) 457 visas.

Relevant legislative provisions

Superannuation Guarantee (Administration) Act 1992 section 19

Superannuation Guarantee (Administration) Act 1992 section 27

Reasons for decision

Summary

Salary or wages paid by the employer to its workers meet the exclusion in subparagraph 27(1)(b) of the SGAA. As such the employer has no obligation to make superannuation payments for its employees working outside Australian territories

Detailed reasoning

Section 27 of the SGAA defines the salary or wages exclusions as follows:

SECTION 27 SALARY OR WAGES: GENERAL EXCLUSIONS

27(1)

The following salary or wages are not to be taken into account for the purpose of making a calculation under section 19:

…

(b) salary or wages paid to an employee who is not a resident of Australia for work done outside Australia (except to the extent that the salary or wages relate to employment covered by a certificate under section 15C);

(c) salary or wages paid by an employer who is not a resident of Australia to an employee who is a resident of Australia for work done outside Australia;

(ca) salary or wages paid by an employer to an employee who is not a resident of Australia for work done in the Joint Petroleum Development Area (within the meaning of the Petroleum (Timor Sea Treaty) Act 2003);

(d) salary or wages paid to an employee who is a prescribed employee for the purposes of this paragraph;

(e) salary or wages prescribed for the purposes of this paragraph.

ATO view - superannuation guarantee: work done outside Australia

ATO Interpretative Decision ATO ID 2012/75 - Superannuation Guarantee: work done outside Australia (ATO ID 2012/75) was published on 17 September 2012.

The issue considered in ATO ID 2012/75 was as follows:

Is work done at sea at a location which satisfies all of the following:

it is outside the outer limits of the 'coastal sea' of Australia;

it is outside the outer limits of the 'coastal seas' of the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands;

it is outside the Joint Petroleum Development Area (within the meaning of the Petroleum (Timor Sea Treaty) Act 2003 ) [JPDA];

'work done outside Australia' for the purpose of subsection 27(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?

The decision relative to ATO ID 2012/75 was:

Yes. Work done at sea at such a location is 'work done outside Australia' for the purpose of subsection 27(1) of the SGAA.

Application of the law

Some salary or wage amounts may be excluded from being taken into account for the purpose of making a calculation of employee superannuation guarantee shortfalls under section 19 of the SGAA.

You have advised further that the salary or wages paid to your employees do not fall under the exclusions in paragraphs 27(1)(c) ,(ca), (d), and (e) of the SGAA.

What constitutes 'Australia' is central to any consideration of whether the salary or wages exclusion in paragraph 27(1)(b) of the SGAA is able to be met.

The issue of what constitutes 'Australia' in the context of subsection 27(1) of the SGAA and the meaning of 'coastal sea' were both addressed in ATO ID 2012/75. The significance of the Acts Interpretation Act 1901 (AIA) in a determination of the meaning of 'Australia' and the view that no contrary intention exits in the SGAA to that provided in the AIA are apparent.

We do not intend to restate the reasons for the decision reached in ATO ID 2012/75 but we highlight the conclusion reached as follows:

In the phrase 'work done outside Australia' as used in subsection 27(1) of the SGAA, 'Australia' is used in a geographical sense and extends to the outer limits of Australia's 'coastal sea'. Further, 'Australia' in that phrase also includes the Territory of Cocos (Keeling) Islands, the Territory of Christmas Island, the 'coastal sea' of each of those Territories, and the JPDA.

Work done outside those areas is 'work done outside of Australia' for the purposes of subsection 27(1) of the SGAA.

As a result, the salary or wages paid to the employee in this case is for 'work done outside of Australia' and so are not taken into account for the purpose of making a calculation under section 19 of the SGAA, due to the operation of paragraph 27(1)(b) of the SGAA.

The facts surrounding the work for which you will be making payments are not materially different to those detailed in ATO ID 2012/75. As such the salary or wages paid by you to your employees is for 'work done outside of Australia' and so are not taken into account for the purpose of making a calculation under section 19 of the SGAA, due to the operation of paragraph 27(1)(b) of the SGAA.

Conclusion

We have established that the salary or wage payments made by you to your employees are not salary or wages for the purpose of making a calculation under section 19 of the SGAA.

Therefore, the employer will not have a superannuation guarantee liability in respect of these salary or wages payments.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).