Edited version of your written advice

Authorisation Number: 1051321713123

Date of advice: 21 December 2017

Ruling

Subject: Status of the Worker

Question 1

Are the Workers who invoice the Principal through an interposed entity considered common law employees of the Principal as defined by subsection 12(1) of the Superannuation Guarantee Administration Act 1992 (‘SGAA’) for the period 1 July 2017 to 30 June 2022 inclusive?

Answer

No. Please refer to ‘why we have made this decision’.

Question 2

Are the Workers who invoice the Principal through an interposed entity considered employees of the Principal by virtue of subsection 12(3) of the SGAA for the period 1 July 2017 to 30 June 2022 inclusive?

Answer

No. Please refer to ‘why we have made this decision’.

This advice applies for the following periods:

Year ended 30 June 2018

Year ended 30 June 2019

Year ended 30 June 2020

Year ended 30 June 2021

Year ended 30 June 2022

The arrangement commences on:

1 July 2017

Relevant facts and circumstances

We considered these to be relevant facts

You requested an administratively binding advice on behalf of the Principal, as to the superannuation guarantee (‘SG’) obligations of the Principal in respect to the Workers.

You discussed the nature of the arrangement between the Principal and the Workers.

You provided further information regarding the arrangement between the Principal and the Workers, including copies of X invoices issued by a company to the Principal for payment during the period.

You provided further information including copies of X invoices issued by a company to the Principal for payment during specified period.

Based on the information provided, we considered the following to be relevant facts:

● The Principal is a business which buys and sells new and used products.

● The Workers are engaged by the Principal through private companies to negotiate the buying and selling of used products. Each of the Workers is engaged through a separate private company.

● There are no written contractual agreements between either the Principal and the Workers, or the Principal and the private companies.

● The private companies are paid by the Principal on a commission basis as a percentage of profit or loss on the sale of used products as negotiated by the Workers. If there is a loss on the sale of a used product, a percentage of the loss is attributed to the private company for the relevant Worker.

● Each private company issues an invoice to the Principal on a monthly basis for the payment of commission based on the sale of used products. The copies of X invoices issued by two separate private companies to the Principal during the period indicate the following:

● each of the invoices have been issued by a company;

● each of the invoices state the company name on the invoice;

● each of the invoices state the ACN of the entity invoicing;

● for one of the entities, each of the invoices state the ABN of the entity invoicing; and

● each of the invoices include GST in the total amount payable.

You have advised that the sample of invoices provided is indicative of the arrangements between the Principal and other Workers engaged through separate private companies.

Relevant legislative provisions

Superannuation Guarantee (Administration) Act 1992 Subsection 12(1)

Superannuation Guarantee (Administration) Act 1992 Subsection 12(3)

Reasons for decision

Why we have made this decision

Summary

1. The facts and evidence suggest that the Workers are not your employees for the purposes of the SGAA under either the common law test or the extended definition as set out in subsection 12(3) of the SGAA. You therefore do not have an obligation to pay superannuation contributions on behalf of the Workers.

Detailed reasoning

Question 1

Are the Workers who invoice the Principal through an interposed entity considered common law employees of the Principal as defined by subsection 12(1) of the SGAA for the period 1 July 2017 to 30 June 2022 inclusive?

Answer

2. Superannuation Guarantee Ruling SGR 2005/1 Superannuation guarantee: who is an employee? (‘SGR 2005/1’) explains when an individual is considered to be an ‘employee’ under section 12 of the SGAA.

3. Paragraph 13 of SGR 2005/1 provides the following with respect to arrangements where an individual performs work for another party through an interposed entity:

Where an individual performs work for another party through an entity such as a company or trust, there is no employer-employee relationship between the individual and the other party for the purposes of the SGAA, either at common law or under the extended definition of employee. This is because the company or trust (not the individual) has entered into an agreement rather than the individual. However, the individual may be the employee of the intermediary company or trust, depending on the terms of the arrangement.

4. Based on the information provided, each of the individual Workers is engaged by the Principal through separate private companies and perform the work through those companies.

5. The sample of invoices provided indicates that each private company issues an invoice to the Principal on a monthly basis for the payment of commission based on the sale of used products.

6. In accordance with paragraph 13 of SGR 2005/1, there is no employer-employee relationship between the Workers and the Principal for the purposes of the SGAA at common law, because the Principal has entered into an agreement with a company rather than the individual.

7. However, the Workers may be employees of their respective private companies at common law, depending on the terms of the arrangement between the Workers and the companies.

Question 2

Are the Workers who invoice the Principal through an interposed entity considered employees of the Principal by virtue of subsection 12(3) of the SGAA for the period 1 July 2017 to 30 June 2022 inclusive?

Answer

8. As per above, in accordance with paragraph 13 of SGR 2005/1, there is no employer-employee relationship between the Workers and the Principal for the purposes of the SGAA under the extended definition of employee. This is because the Principal has entered into an agreement with a company rather than the individual.

9. However, the Workers may be employees of their respective private companies under the extended definition of employee, depending on the terms of the arrangement between the Workers and the companies.