Edited version of private advice

Authorisation Number: 1052234843066

Date of advice: 27 March 2024

Ruling

Subject: Definition of employee

Question 1

Are performers and entertainers engaged through talent agencies employees of the Principal under the expanded definition of employee under subsection 12(8) of the Superannuation Guarantee (Administration) Act 1992 (SGAA) for the period 1 July 20XX to 30 June 20XX?

Answer

No.

Question 1(a)

Are multiple performers who are members of a group performance employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Question 2

Are individuals providing production services employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Question 3

Are Bingo and Raffle game callers employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAAfor the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Question 4

Are DJs and solo artists employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Question 5

Will the individuals hosting exercise classes at the venue employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

This advice applies for the following period:

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The arrangement commenced on:

1 July 20XX

Relevant facts and circumstances

Your advice is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this advice has no effect and you cannot rely on it. The fact sheet has more information about relying on ATO advice.

1.    The Principal operates a registered and licensed club. The Principal's ongoing intention is to provide members with hospitality, entertainment, and recreation as well as promoting various sporting and social interactions within the local community.

2.    In the course of business, the Principal frequently organises a broad range of performances by entertainers and other individuals to provide entertainment for members. These include musicians, DJs, games hosts, facilitators and instructors who provides services at the venue of the Principal as required.

3.    The arrangements between the Principal and the service providers are expected to be varied. For some arrangements, services are provided no more than once or twice a week, whilst for others the services are provided once a month or once a year. There are also arrangements in which services are provided as a once off and for no more than a few hours.

Talent Agencies providing entertainers and performers to the Principal:

4.    Performers and entertainers are engaged through talent agencies for the purpose of performing an act, either as individuals or as part of a group at the venue.

5.    These agencies are generally professional organisations conducting an enterprise connecting clients with performers. The performers would have a valid ABN, normally have their own liability insurance and have entered into a sub-contractor arrangement with the agency (at times the agency may organise liability insurance for the performance environment). The performers are responsible for their own travel arrangements, instruments, equipment and set-up.

6.    The agency does not participate in any of the performances.

7.    The Principal pays an agreed fee directly to the talent agency for providing the performers.

8.    For larger performances, the booking agent receives a fee based on the share of expected revenue or other agreed fee. The agent and the Principal are both parties to a booking arrangement. The agent invoices the Principal for the agreed fee, which is paid directly to the agent by the Principal. The agent is responsible for the distribution of payments to the performers; the Principal would not be involved in the payment of the performers in such circumstances.

Performers engaged directly by the Principal for group performances:

9.    Occasionally the Principal directly engages a musical group for a limited number of performances. Where these groups are not represented by a third-party agency, the Principal may come to an arrangement with one of the group members representing the group to negotiate an agreed fee. It is unlikely that a written contract would be in place between the Principal and any of the performers in the group.

10.  The individual performers within the group would have their own ABNs and public liability insurance. They are responsible for their own travel arrangements, providing their own equipment and set-up.

11.  The Principal would only pay the individual representing the Group (who would have their own sole-trader ABN) the agreed fee for their performance. This individual would then disperse the payment to the rest of the performers in the group; the Principal would not be involved in the distribution of payments from the individual group member to the remaining group members as this would be considered an arrangement solely within the group.

Performance production services:

12.  For some performances, specialised lighting and sound may be required and the Principal engages suitably qualified individuals to operate the equipment for the performances. The specialised equipment is fixed on site and is the property of the venue.

13.  These individuals would have a valid ABN, normally have their own liability insurance and have often entered into a sub-contractor arrangement with another party, but not the Principal. These individuals are able to subcontract the work and/or employ staff of their own, but it would be expected that the venue's equipment is used in these instances.

14.  Where appropriate, individuals providing the specialised lighting and sound equipment operation are engaged directly and paid by the Principal.

Bingo and Raffle callers:

15.  The Principal may directly engage the services of an individual to organise and call Bingo games and raffles. These arrangements are occasional in nature and would consist of a verbal agreement between the Principal and the individual for remuneration for the provision of service, payable directly to the individual. The individual is not paid for a performance, but rather hosting an event or activity for which they are paid upon completion.

16.  As hosts, the Bingo and Raffle callers cannot participate in the games themselves; they do not supply any of the prizes, goods or equipment used for the activity. They would hold a valid individual ABN.

17.  The callers are unable to delegate their duties and if they were unable to perform at a specific event, the Principal would be responsible for finding a replacement caller.

DJs and solo artists:

18.  These arrangements are occasional in nature and would consist of a verbal agreement between the Principal and the artist for set remuneration for the performance(s), payable directly to the individual upon invoicing the Principal. The individual performers have their own ABN and public liability insurance. The performers are responsible for their own travel arrangements, equipment and set-up.

Gentle exercise and yoga class instructors:

19.  The venue holds weekly "gentle exercise" and yoga classes on the premises, which are hosted by a registered professional trainer/gym or yoga instructor with their own public liability and indemnity insurance.

20.  The individual instructor provides their own ABN and invoices the Principal for payment of fees per session hosted; they are paid directly by the Principal. This arrangement would be based on a verbal agreement.

21.  Where an instructor is unable to take a class as scheduled, the Principal would cancel that session.

22.  The instructors have no right of delegation. Replacement/substitute instructors are not engaged and there is no obligation to supply a substitute instructor nor any payment obligation on the instructor who cannot take a previously scheduled exercise class.

Relevant legislative provisions

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

Reasons for Decision

These reasons for decision accompany the Notice of advice.

This is to explain how we reached our decision. This is not part of the advice.

Question 1

Are performers and entertainers engaged through talent agencies employees of the Principal under the expanded definition of employee under subsection 12(8) of the Superannuation Guarantee (Administration) Act 1992 (SGAA) for the period 1 July 20XX to 30 June 20XX?

Answer

No.

Question 1(a)

Are multiple performers who are members of a group performance employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Question 2

Are individuals providing production services employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Question 3

Are Bingo and Raffle game callers employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Question 4

Are DJs and solo artists employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Question 5

Are the individuals hosting exercise classes at the venue employees of the Principal under the expanded definition of employee under subsection 12(8) of the SGAA for the period 1 July 20XX to 30 June 20XX?

Answer

Yes.

Summary

Question 1

The facts and evidence provided support that the performers engaged through talent agencies are not employees of the Principal for the purposes of Subsection 12(8) of the SGAA.

Summary

Questions 1(a) - 5

The facts and evidence provided support that the workers are employees of the Principal for the purposes of Subsection 12(8) of the SGAA.

The Law

24. 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.

25.       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]

26.       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)

27.       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)

28.  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)

29.       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]

30.       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]

31.       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)

32.       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]

33.       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]

Application

34.       Meaning of "activity" in 12(8)

35.       The purpose of subsection 12(8) is to expand and make provision to avoid doubt as to the status of certain persons engaged in particular activities - in this case music", "play", "dance" or "entertainment". Subsection 12(8) by its terms applies to 'any... music, play, dance or entertainment... or any similar activity...involving the exercise of intellectual,... physical or other personal skills...'. In the context in which the term appears, it is considered that "music", "play", "dance" or "entertainment" should be given a broad meaning for the purposes of the SGAA and should not be read narrowly to limit the scope of subsection 12(8).

36.       In SGR 2009/1, the Commissioner's position was that the word "'similar' is used to show that 'activity' is limited to things of a like kind. 'It is considered that activities covered by paragraph 12(8)(a) are those which derive their sporting content from the performance or presentation because that is the common thread running through the listed activities." We can apply the same reasoning to the performances in this content.

37.       Relevantly, SGR 2009/1 stated that the scope of paragraph12(8)(a) was written to apply to 'any person' who is paid to perform, present or participate. They found that the application of the test is dependent on the character of the payments made and therefore there is no need to differentiate between 'amateur' or 'professional'.

38.       As the meaning of 'activity' in the SGAA is intended to be broad, we consider that the productions put on by the Club are activities within the meaning of subsection 12(8).

39.       Paragraphs 12(8)(b) and 12(8)(c) of the SGAA do not require the person to actively participate in a performance, presentation, broadcast or other activity described within paragraph 12(8)(a) to be defined as an employee; rather the paragraphs specify that the person will be an employee if they provide a service in connection with the activity. For example, a technician engaged to control the sound quality for a concert is not an active participant in any performance. Even though the technician is not within paragraph 12(8)(a), they are still an employee because they are paid for services in connection with a musical performance.

40.       Workers who are providing services in connection with the provision of the performance under paragraph 12(8)(a) of the SGAA fall under paragraph 12(8)(b) and paragraph 12(8)(c) of the SGAA depending on the activity.

In Your Case

1. Talent agencies providing entertainers and performers to the Principal:

The Talent Agency has the responsibility to pay the Performer once the agency receives their fees from the Principal. The talent agency invoices the Principal on behalf of the Performer, but no contract exists between the performer and the Principal. The contract is between the talent agency and the Performer, with the talent agency liable for making the payment to the Performer.

The Principal does not enter into contracts with the talent agency nor the performers, due to the limited number of performances expected to be provided. Whilst the agency would invoice the Principal for the provision of the performer and receives payment directly from the Principal for doing so, the agency itself is responsible for remuneration of the performers.

At times, the Principal and a booking agent enter an arrangement to sell tickets for a performance at the venue, for which the Principal will receive an agreed fee. This agreement is between the Principal and the booking agent, not between the Principal and the Performer. The booking agent would invoice the Principal for the agreed fee, which is paid to the booking agent directly. The booking agent is responsible for the subsequent payment of the performer.

Upon considering all the available facts and evidence, the Commissioner is satisfied that performers engaged through talent agencies do not meet the definition of an employee for the purposes of the SGAA under either common law or the expanded definition provided under subsection 12(8) of the SGAA.

Accordingly, the Principal does not have an obligation under the SGAA to pay superannuation contributions for the benefit of performers supplied through and paid by talent agencies.

1(a). Performers engaged directly by the Principal for group performances:

The Principal on occasion may directly engage a musical group to perform at the venue of the Principal, usually as a one-off performance or on an ad-hoc basis.

In these instances, the Principal will engage with and make a payment to the representative of the Group (when not represented by a talent agency) for the performance. There is generally no written contract between the Principal and the group's members. The amounts paid to the group for its performances are negotiated by the group members, usually with one group member representing the entire group. This group member would have their own sole-trader ABN which would be included on the invoice provided to the Principal for their performance.

The representative of the group is paid the agreed fee for the performance and it is the representative's responsibility to pay the remaining members.

It is considered that the individual representing the Group engaged by the Principal meets the definition of employee as set out under subsection 12(8) of the SGAA.

As this particular individual is an employee of the Principal, amounts paid to them are paid as a consequence of employment. Therefore, the Principal is required to make Superannuation Guarantee payments pursuant to subsection 12 (8) of the SGAA.

The remaining group members are considered employees of the representative who has arranged the agreed performance and fees on the group's behalf, as well as paying them directly. The Principal is not paying those performers for their own individual efforts.

Accordingly, the Principal will have an obligation to pay superannuation contributions to the group representative who receives payment from the Club on behalf of the group for their performance. However, the Principal does not have an obligation to pay superannuation contributions for the benefit of the remaining members of the musical group under subsection 12(8) of the SGAA.

2. Individuals providing production services:

Where the individuals providing the service have been engaged directly and are paid by the Principal, a superannuation guarantee would exist. A person who is paid to provide services in connection with an activity referred to in paragraph 12 (8)(a) is an employee of the person liable to make the payment. A person includes a company as per the Income Tax Administration Act 1997.

It is considered that the individuals providing production services engaged by the Principal meet the definition of employee as set out under subsection 12(8) of the SGAA.

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

However, the Principal does not have an obligation to pay superannuation contributions for the benefit of the individual providing services in connection to activities referred to in paragraph 12(8)(a) where the individuals have been engaged by and are paid by the artist/performer.

29.      Bingo and Raffle callers:

Individuals providing services in connection with the provision of the Bingo and Raffle game hosting and calling under paragraph 12(8)(a) of the SGAA fall under paragraph 12(8)(b) and paragraph 12(8)(c) of the SGAA depending on the activity.

Therefore, the Bingo game and raffle callers are considered to be employees of the Principal under paragraph 12(8)(b) and 12(8)(c) of the SGAA in relation to payments for services provided in connection with an activity described in paragraph 12(8)(a) of the SGAA.

You contend that Bingo and Raffles are not activities captured under subsection 12(8) of the SGAA as their main purpose of conducting the games is to attract patrons to the venue, rather than providing entertainment. However, the meaning of 'activity' in the SGAA is intended to be broad and therefore we consider that Bingo and raffle game hosting are activities within the meaning of subsection 12(8).

It is considered that the individuals engaged by the Principal meet the definition of employee as set out under subsection 12(8) of the SGAA.

As these individuals are employees of the Principal, amounts paid to the Workers are paid as a consequence of employment. Therefore, the Principal is required to make Superannuation Guarantee payments pursuant to subsection 12 (8) of the SGAA.

30.      DJs and solo artists:

Where the DJ/solo artists providing the performances have been engaged directly and are paid by the Principal, it is considered that the individuals engaged by the Principal meet the definition of employee as set out under subsection 12(8) of the SGAA.

As these individuals are employees of the Principal, amounts paid to the individuals are paid as a consequence of employment. Therefore, the Principal is required to make Superannuation Guarantee payments pursuant to Section 12 (8) of the SGAA.

31.      Individuals hosting yoga sessions and exercise classes:

Where individuals hosting yoga sessions or providing instruction to participants in an exercise class have been engaged directly through and are paid by the Principal, a superannuation guarantee would exist.

It is considered that the individuals engaged by the Principal meet the definition of employee as set out under subsection 12(8) of the SGAA.

As these individuals are employees of the Principal, amounts paid to these individuals are paid as a consequence of employment. Therefore, the Principal is required to make Superannuation Guarantee payments pursuant to Section 12 (8) of the SGAA.

[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.