Edited version of private advice

Authorisation number: 1052217218005

Date of advice: 7 February 2024

Ruling

Subject:Superannuation guarantee payments

Question

Is the worker an employee of the Principal under the expanded definition of an employee under subsection 12(8) of the Superannuation Guarantee (Administration) Act 1992 (SGAA) for the period DD MM 20YY to DD MM 20YY?

Answer

Yes.

This advice applies for the following periods:

Year ending 30 June 20YY

The scheme commenced on:

1 July 20YY

Relevant facts and circumstances

The worker was approached to XXXX and oversee the training of the XXXX for the Principal.

The worker commenced their service for the Principal in MM 20YY.

The Worker invoices the Principal a set amount of $XX per week.

The contract between the parties is of a verbal nature.

The worker is verbally contracted for XX weeks every calendar year.

The worker performs no other duties other than XXX and training of the XX

Relevant legislative provisions

Superannuation Guarantee (Administration) Act 1992 section 12 (8)

Reasons for decision

Question

Is the worker an employee of the Principal under the expanded definition of an employee under subsection 12(8) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)for the period DD MM 20YY to DD MM 20YY?

Answer

Yes.

Summary

The facts and evidence provided suggest that the workers are not employees of the Principal for the purposes of Subsection 12(3) of the SGAA.

The Law

Subsection 12(8) of the SGAA extends the definitions of 'employee' and 'employer' as follows:

(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.

Where a person is paid for participation in or provision of services in connection with certain activities described in subsection 12(8), the person will be treated as an employee of the payer under subsection 12(8) for the purposes of the SGAA.[1]

In determining the character of the relevant payment, reference must be made to the substance of the arrangement, and each case must be examined on all the facts and circumstances.

Superannuation Guarantee Ruling SGR 2009/1 Superannuation guarantee: payments made to sportspersons provides the Commissioner's view as to how subsection 12(8) applies to sportspersons and persons providing services in connection with sporting activities. However the general concepts in the SGR may assist in applying the law to artists, musicians or other performers who are also referred to in subsection 12(8).

Payments for participation or performance - paragraph 12(8)(a)

In order to fall within the scope of paragraph 12(8)(a), the person must receive a payment that is directly referable to the person's performance or participation in the performance of the activity, regardless of the result achieved from that participation.[2]

The person is also required to actively participate in the activity[3] and that performance or participation must involve the exercise of the person's physical or personal skills, irrespective of the level of success achieved.[4]

Payments for services provided in connection with an activity - paragraph 12(8)(b)

The words 'in connection with' under paragraph 12(8)(b) do not have a specific technical meaning and should take on their ordinary meaning having regard to the context in which they appear.[5] This term has been judicially considered in the context of income tax legislation. Wilcox J in Our Town FM Pty Ltd v Australian Broadcasting Tribunal[6] provides a useful summary, in particular referencing Re Nanaimo Community Hotel Ltd where the trial judge said:[7]

One of the very generally accepted meanings of 'connection' is 'relation between things one of which is bound up with or involved in another'; or, again 'having to do with'. The words include matters occurring prior to as well as subsequent to or consequent upon so long as they are related to the principal thing. The phrase 'having to do with' perhaps gives as good a suggestion of the meaning as could be had. (emphasis added)

Consequently, 'in connection with' requires that the services a person is paid to provide or perform must relate directly to the relevant activity in question. It covers persons providing the 'behind the scenes' services which enable the relevant activity to occur.[8]

Services provided or performed before or after the relevant activity occurs may fall within the scope of paragraphs 12(8)(b) as long as the services are 'bound up or involved in' that activity.[9]

The terms of paragraph 12(8)(b) will not be satisfied where services are provided at the same time as the activity but are provided for some other purpose, for example, advertising.[10] In such circumstances, the direct causal link required by paragraph 12(8)(b) will not exist.

Payments for provision of services in, or in connection with, any television or radio broadcast - paragraph 12(8)(c)

A person who is paid to appear on a television or radio broadcast will be an employee of the payer under paragraph 12(8)(c). The terms of paragraph 12(8)(c) do not require that the person participate or perform in such a broadcast using their physical or personal skills.[11]

The term 'in connection with' is read in a similarly narrow way as that under paragraph 12(8)(b) - that is, the payment is made for services that are directly related to the making of any film, tape or disc or of any television or radio broadcast.[12]

In Your Case

The Worker is paid to XX in a weekly service for the Principal, the worker is providing personal skills, therefore, is an employee of the person liable to make the payment; the Principal.

The Worker is paid a set fee per week to perform in and co-ordinate rehearsals for the XX and train the XX, co-ordinating the rehearsals and training, is considered in connection with providing the workers personal skills of XX.

After comparing the facts against the above factors, it is considered that the Worker engaged by the Principal meet the definition of employee as set out under subsection 12(8) of the SGAA.

As Worker is an employee of the Principal, amounts paid to the Worker are paid as a consequence of employment. Therefore, required to make Superannuation Guarantee payments pursuant to Section 12 (8) of the Superannuation Guarantee (Administrative)Act 1992

[1] See Commissioner of Taxation v Racing Queensland Board [2019] FCAFC 224 at [50-52], and Commissioner of Taxation v Scone Race Club Limited [2019] FCAFC 225 at [10-11], per Griffiths J (adopted by Steward J at [82] and [84], whose reasons were agreed with by Derrington J at [80]).

[2] SGR 2009/1 at [74-76].

[3] SGR 2009/1 at [69-70]. See also General Aviation Maintenance Pty Ltd v Commissioner of Taxation [2012] AATA 120 (General Aviation) at [30].

[4] SGR 2009/1 at [71-73].

[5] SGR 2009/1 at [81].

[6] (1987) 16 FCR 465 at [479-480]; (1987) 77 ALR 577 at [591-592].

[7] [1945] 3 DLR 225 at [639].

[8] SGR 2009/1 at [82].

[9] Ibid.

[10] SGR 2009/1 at [12].

[11] SGR 2009/1 at [13].

[12] Ibid.