Edited version of your written advice

Authorisation Number: 1012729970161

Advice

Subject: Definition of employee for the purposes of the Superannuation Guarantee Administration Act 1992

Question 1

Are the workers (the Workers) engaged by you considered to be employees for the purposes of the Superannuation Guarantee Administration Act 1992 (SGAA)?

Advice

Yes. Refer to 'why we have made this decision'

This advice applies for the following period:

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

Year ending 30 June 2018

The arrangement commences on:

1 July 2014

Relevant facts and circumstances

You applied for advice with regard to your obligations under the SGAA.

The Workers are musicians who perform for you.

We took these laws into account

Superannuation Guarantee Administration Act 1992 subsection 11(1)

Superannuation Guarantee Administration Act 1992 section 12

Superannuation Guarantee Administration Act 1992 subsection 12(8)

We followed these ATO view documents

Superannuation Guarantee Ruling SGR 2005/1 Superannuation guarantee: who is an employee?

Reasons for decision

Summary

Superannuation law extends the definition of 'employee' to include certain persons that aren't normally identified as common law employees. Musicians are included as employees for the purposes of the SGAA under subsection 12(8). You therefore have an obligation to provide superannuation support for the Workers for the period under review.

Detailed reasoning

The SGAA states that an employer must provide the required minimum level of superannuation support for its employees (unless the employees are exempt employees) or pay the Superannuation Guarantee Charge.

While the term 'employee' which is defined in section 12 of the SGAA, includes common law employees, it also extends to include certain types of workers, including those who are engaged as performing artists under subsection 12(8) of the SGAA.

Expanded definition of Employee under Subsection 12 (8) of the SGAA

Superannuation Guarantee Ruling SGR 2005/1: Superannuation Guarantee: Who is an Employee? (SGR 2005/1) sets out the ATO view on when an individual is considered to be an 'employee' under section 12 of the SGAA.

At paragraph 61, SGR 2005/1 states:

Although the term 'employee' has its ordinary meaning in the SGAA, subsections 12(2) to 12(11) list a number of further persons who are also treated as employees. These subsections deem persons who come within these subsections to be employees for the purposes of the SGAA, even if they are not common law employees and are clearly distinguishable from common law employees.

Subsection 12(8) of the SGAA states that an 'employee' for the purposes of the SGAA includes:

(a) a person who is paid to perform or present, or to participate in the performance or presentation of, any music, play, dance, entertainment, sport, display or promotional activity or any similar activity involving the exercise of intellectual, artistic, musical, physical or other personal skills

(b) a person who is paid to provide services in connection with an activity referred to in paragraph (a) is an employee of the person liable to make the payment; and

(c)  a person who is paid to perform services in, or in connection with, the making of any film, tape or disc or of any television or radio broadcast is an employee of the person liable to make the payment.

Application to your case

In your case the Workers are paid to perform music using their musical skills which clearly fits under the description of paragraph 12(8)(a) of the SGAA.

This is regardless of the manner in which they are engaged. They may be identified as 'independent contractors' under common law, however for the purposes of the SGAA, they are specifically included as 'employees' due to the nature of their work.

As section 12(8) of the SGAA specifically identifies musicians as employees, you are required to provide superannuation support for any workers of this nature you engage.