There has been a string of recent cases before the Courts and the tribunals about whether someone who pays an amount to another person for services of some kind is liable to make superannuation guarantee charge (SGC) payments in respect of the amount paid to that person. 

One of the more prominent, and unusual ones, has been a decision of the Tribunal that found that the Australian Turf Club was liable for SGC in respect of race day payments it made to jockeys at various racetracks around the state (and the country). 

The AAT made its decision on the basis of a provision in the Superannuation Guarantee legislation which provides that, for SGC liability purposes, persons such as artists, musicians, sports persons who are “paid to perform” are deemed to be employees of the person who is liable to make the payment to them.

That decision is on the more unusual side of things. But it does illustrate that if you are liable to make a payment to an artist or a sportsperson for their “performance” you will be liable for SGC.

On the other side of the ledger was a more recent decision of the AAT in which it was held that a plumber engaged by a plumbing firm was not an employee for SGC purposes because he was in fact running his own business – and was operating as an independent contractor.

In this case, it was significant that the degree of control exercised over the plumber’s work by the plumbing firm which made the payment to him was not sufficient to warrant him being classified as an employee for SGC purposes.

In particular, it was relevant that the plumber was expected to perform tasks at his own discretion and without supervision and that he advertised his services outside his relationship with the plumbing firm and performed jobs for other clients away from the plumbing firm. 

However, a number of prior cases before that decision found that the key matter in determining whether a person was an independent contractor was whether they had a “right to delegate” their work under the particular contractual arrangement with the payer. 

This was the case whether or not the right to delegate was an express or implied term in the contract – and, moreover, whether or not, that right to delegate had ever been exercised!

So, that seems to be the key test in determining whether a person is an independent contractor for whom SGC payments do or do not have to be made in respect of amounts that are paid.

But as with everything to with tax law and tax obligations, it will also come down to all the facts of the situation and the circumstances in which the payment is made.

Therefore, you should speak to us if you are in any doubt about the matter – or even if you just want a double check of things.