Edited version of your written advice

Authorisation Number: 1051353246688

Date of advice: 29 June 2018

Ruling

Subject: Status of the worker

Question

Are the workers employees of the employer under section 12/(8)(c) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?

Answer

Yes.

This advice applies for the following periods:

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017.

The arrangement commences on:

1 April 2014.

Relevant facts and circumstances

This 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 Australian Taxation Office (ATO) advice.

Your legal representative wrote to us asking for written confirmation of your superannuation guarantee obligations in regards to X workers.

You requested advice as to whether the workers, engaged on separate occasions under separate contracts, were in fact considered employees of the employer under paragraph 12(8)(c) of the SGAA 1992.

The employer had engaged the services of the workers on X separate occasions to produce corporate videos.

The employer entered into an agreement with the X worker with a commencement date in mid-201A and a completion date in late 201A. The agreement was for the worker to produce X corporate videos and provide X versions of each, one long version and one short. The agreement set out a maximum payment amount to be worked out on hourly rates for the various tasks undertaken. The final amount paid was below his maximum.

The employer entered into an agreement with the Y worker in mid- 201B for a term of X months. It then entered into another agreement with the worker in late 201C with a completion date in late 201C. Both agreements with the worker were for the production of videos and self-directed tutorials. Payment was via set daily rates depending on the service. Payment under the first agreement could not go over the maximum limit without prior agreement with the employer. A similar negotiated level was set under the second agreement.

Both workers have ABN’s and operate businesses under these.

The videos produced by the workers were in a specific format and were provided to the employer via various links. They are stored on the employer’s servers and distributed via numerous means including social media, online distribution, email, or viewed within presentations. They are distributed in a specific format.

Relevant legislative provisions

Superannuation Guarantee Administration Act 1992 section 12(8).

Acts Interpretation Act 1901 section15AA

Acts Interpretation Act 1901 section 15AB

Explanatory Memorandum to the Superannuation Guarantee (Administration) Bill 1992

Income Tax Assessment Act 1936 section 158B

Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 4)

Income Tax Assessment Act 1997 section 405-25(3)

Income Tax Assessment Act 1997 section 405-25(4)(b)

Income Tax Assessment Act 1997 section 995-1

Case law

Lake Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327; [1970] HCA 32

Uber BV v Federal Commissioner of Taxation [2017] FCA 110

Woodside Energy Ltd v. Commissioner of Taxation [2009] FCAFC

National Rugby League Investments v Singtel [2012] FCAFC 59; (2012) 201 FCR 147; (2012) 289 ALR

General Aviation Maintenance Pty Ltd v Commissioner of Taxation [2012] AATA 120; 87 ATR 552

Wilson v Commissioner of Stamp Duties (1988) 13 NSWLR 77, 86; 88 ATC 4307; 19 ATR 1107.

FCT v Henderson (1943) 68 CLR 29, 44; [1943] HCA 48

Reasons for decision

The workers were engaged by the employer to film and edit a number of corporate videos suitable to the employer’s nature of business.

Staff of the employer, clients, and other participating entities were featured in the videos and no actors were used in the videos.

The videos were placed on ‘social network’ and promote the activities of the employer.

Subsection 12(8) of the SGAA states:

(8) The following are employees for the purposes of this Act:

(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 is an employee of the person liable to make the payment;

(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;

(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.

Subsection 12(1) provides the purpose of section 12:

(1) Subject to this section, in this Act, employee and employer have their ordinary meaning. However, for the purposes of this Act, subsections (2) to (11):

(a) expand the meaning of those terms; and

(b) make particular provision to avoid doubt as to the status of certain persons

In the application, it was stated that the workers were not engaged to produce a ‘film, tape or disc’ as stated in paragraph 12(8)(c) of the SGAA.

The employer submits that the workers do not fall under paragraph 12(8)(c) because:

(a) the Macquarie Dictionary defines ‘film’ as:

a film strip containing consecutive pictures or photographs of objects in motion presented to the eye, especially by being thrown on to a screen by a projector so rapidly as to give the illusion that the objects or actors are moving

and digital videos do not fall within this definition, and

(b) paragraph 12(8)(c) should be read with paragraph 12(8)(a) such that paragraph 12(8)(c) is limited to films, tapes or discs in relation to the activities listed in paragraph 12(8)(a).

The ATO considers the term ‘film, tape or disc’ includes digital videos.

Having regard to the statutory interpretation principle that the legislation is deemed to be always speaking, section 15AA of the Acts Interpretation Act 1901 (AIA), and the use of the phrase ‘film, tape or disc’ in other legislative contexts, the phrase ‘film, tape or disc’ in paragraph 12(8)(c) should be construed to include digital video content.

Often in cases where technological neutrality is desirable, courts will find that legislation is always speaking. For example, in Lake Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327; [1970] HCA 32 concerned the meaning of ‘gas’ in the Local Government Act 1919 (NSW), and whether this was confined to coal gas (which was the only form of gas in use in 1919). In this context, Barwick CJ could see no legislative intent to limit the meaning of ‘gas’, and held that it extended to liquid petroleum gas.

More recently, in Uber BV v Federal Commissioner of Taxation [2017] FCA 110, (Uber) Griffiths J accepted (at paragraph 130) that the relevant provisions concerning ‘taxi travel’ were sufficiently ambulatory to include the uberX service.

In Uber, the Commissioner submitted with authority his view that that legislation should be treated as always speaking, unless a contrary intention is apparent.

Thus, in determining whether, in a particular circumstance, a piece of legislation is capable of being interpreted as ‘always speaking’ (for example, in the context of technological change), two lines of enquiry are necessary:

(a) whether there is any indication in the legislation, its purpose and context of the extent to which the legislature intended to limit (or would wish to extend) the scope of the legislation, and

(b) whether, as a matter of language, the words are capable of sustaining the proposed extension.

To this end, it is necessary to examine:

● the terms, purpose and context of paragraph 12(8)(c), and

● whether the relevant digital video content under consideration is capable of being sustained by the words of paragraph 12(8)(c).

Purpose of paragraph 12(8)(c)

Section 15AA of the AIA states that:

In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation.

Section 15AB of the AIA permits resort to extrinsic material to determine the purpose or object of an Act.

The Explanatory Memorandum to the Superannuation Guarantee (Administration) Bill 1992 (the EM) is silent on the specific purpose of the use of the term ‘film, tape or disc’. Similarly, the second reading speech to the Superannuation Guarantee (Administration) Bill 1992 (the Second Reading Speech) is silent on the meaning of paragraph 12(8)(c).

However, the general legislative purpose of the SGAA is described as being to ‘encourage employers to provide a minimum level of superannuation’ for employees, and to impose a tax where employers provide superannuation support below a minimum level.

In the Second Reading Speech, Treasurer Dawkins stated that ‘there is an ongoing need to ensure as many Australians as possible have access to superannuation, and that the superannuation guarantee levy is consistent with this goal’. An interpretation that best achieves this aim should be preferred to any other interpretation. It is consistent with this stated intention that the SGAA be read broadly.

Section 12 expands the common law meaning of employee for the purposes of the SGAA, specifically subsection 12(1) describes the intended effect of section 12 is to expand and clarify the meaning of employee. It is consistent with this general purpose that paragraph 12(8)(c) be read broadly. It is not apparent from the EM, known authorities on section 12, or from the context in which subsection 12(8) sits in the broader legislative measure that Parliament intended to specifically limit paragraph 12(8)(c) such that the always speaking principle could not apply in appropriate circumstances.

If a narrow view of the meaning of ‘film, tape or disc’ were adopted, potentially anomalous situations could result where employers are:

● under an obligation to provide superannuation support to persons providing services in connection with a digital video file stored on film, tape or disc, and

● under no obligation to support persons providing services in connection with the same digital video file not stored on film, tape or disc.

The only obvious difference between the two scenarios is the means by which the content is stored, the thing being produced in both cases being audio visual content that people can watch. It appears safe to assume that in 1992, the predominant method for storing such content was on film, tape or disc; whereas technological change has broadened the range of possibilities.

Interpreting ‘film, tape or disc’ as including digital video content stored or transmitted by other technological methods would reduce the likelihood of such anomalies occurring. If this interpretation was available, it would also appear to be consistent with section 15AA of the AIA (as it best achieves the purpose of the SGAA).

In determining the meaning of an Act, reference can be made to similar statutes within the same jurisdiction. This principle has particular force if the legislation under consideration and that to which it is compared had their origins in the same source. Therefore, in addition to the purpose and context able to be discerned directly in relation to subsection 12(8), some assistance may be derived from provisions in other Acts of which the Commissioner has administration.

The phrase ‘film, tape or disc or of any television or radio broadcast’ was inserted into the section 158B of the Income Tax Assessment Act 1936 (ITAA 1936) by the Taxation Laws Amendment Act (No. 4) 1987. This was prior to the use of the same phrase in a broadly similar context in the SGAA in 1992. In former subsection 158B(1) of the ITAA 1936 the second limb of the definition of ‘performer’ includes someone who ‘performs or appears in or on a film, tape or disc or in a television or radio broadcast’.

The Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 4) 1987 explains the use of the phrase ‘film, tape or disc or in a television or radio broadcast’ in the following way:

The second limb to the definition of "performer" covers those activities within the performing arts field which are not always carried on in the presence of an audience. These activities are those in the performance or appearance of the person in or on a film, tape or disc or in a television or radio broadcast.

The Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 4) 1987 makes it clear that the use of the phrase ‘film, tape or disc or of any television or radio broadcast’ was intended to cover activities within the performing arts field which are not always carried on in the presence of an audience. There is nothing in the Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 4) 1987 to indicate that ‘film, tape or disc or in a television or radio broadcast’ was intended to be limited to the physical means of storage.

To achieve the overall purpose of the SGAA and to avoid anomalies due to the advancement of technology since 1992, it is considered that ‘film, tape or disc’ is ‘always speaking’ to the extent that its words can accommodate the purported extension.

Can digital video content in the present circumstances be accommodated by the words of paragraph 12(8)(c)?

Proceeding on the basis that paragraph 12(8)(c) is not precluded from being ‘always speaking’, it is a matter of determining whether or not the relevant phrase (and, in the context of this scenario, specifically the word ‘film’) is capable of sustaining the extension to the kind of content under consideration.

The Oxford Dictionary defines the meaning of ‘film’ as including:

2. A story or event recorded by a camera as a set of moving images and shown in a cinema or on television

Noting the reservations expressed about the use of dictionaries in Uber at [134], it is considered that the usage of ‘film’ as ‘a story or event to be shown in a cinema, on television’ is not inconsistent with its common meaning.

Further, in General Aviation Maintenance Pty Ltd v Commissioner of Taxation [2012] AATA 120; 87 ATR 552 (General Aviation Maintenance), the Administrative Appeals Tribunal accepted that DVDs fell under the guise of ‘film, tape or disc’ in the context of paragraph 12(8)(c). The tribunal referred to ‘video recording services relating to a digital file supplied to the [customers of General Aviation Maintenance]’ on a DVD as paying ‘the Tandem Master to make a film or disc’.

In Wilson v Commissioner of Stamp Duties, (Wilson) Priestley JA held that ‘motion picture film’ did not encompass videotapes; this was because the use of the word film in the phrase ‘motion picture film’ gave ‘film’ in that context a technical significance meaning it could not be interchanged with videotapes. However, his Honour also stated that the words movie, film and video were more or less interchangeable, suggesting that the denotation of ‘film’ has a meaning which could include video.

While defined terms in statutes must be read in their context, courts should not ignore a defined term in another statute where that statute is dealing with the same subject matter. Consideration can be given to a defined term in another Act where it would result in coherent and consistent use of an expression. In FCT v Henderson, in determining the meaning of ‘mine’ in the ITAA 1936, Latham CJ stated that reference to a State statute was possible to show that construing ‘mine’ a certain way was consistent with the ITAA 1936.

In the context of above-average special professional income, subsection 405-25(3) of the ITAA 1997 provides that you are a performing artist ‘if you perform or appear in a film, tape, disc or television or radio broadcast’. Both subsection 405-25(3) and paragraph 405-25(4)(b) of the ITAA 1997 were based on definitions in former section 158B of the Income Tax Assessment Act 1936 (ITAA 1936) and Section 995-1 of the ITAA 1997 now defines film as ‘an aggregate of images, or of images and sounds, embodied in any material’.

In the case of ‘film’, the SGAA and the ITAA 1997 share marked similarities. Superannuation and taxation are inextricably linked, and both are administered by the Commissioner.

In all of the circumstances, specifically including:

(b) the ordinary meaning of the word film

(c) the usage of ‘film’ in General Aviation Maintenance and Wilson, and

(d) the definition and usage of ‘film’ in the ITAA 1997

it is considered that the word ‘film’ in paragraph 12(8)(c) is capable of extension to include digital video content of the kind presently under consideration.

Conclusion

Based on the principle that legislation is always speaking the phrase ‘film, tape or disc’ in paragraph 12(8)(c) includes digital video content under consideration. Therefore, the workers are employees of the employer under paragraph 12(8)(c) of the SGAA on the basis that they are paid to perform services in, or in connection with, the making of any film, tape or disc or of any television or radio broadcast.