Source: https://www.ato.gov.au/law/view/document?LocID=%22DSG%2FSGR2004D1%2FNAT%2FATO%22&PiT=99991231235958
Timestamp: 2019-04-19 02:28:41+00:00

Document:
This document has been finalised by SGR 2005/1.
This document is a draft for industry and professional comment. As such, it represents the preliminary, though considered views of the Australian Taxation Office. This draft may not be relied on by taxpayers and practitioners.
4. It also provides the Australian Taxation Office (ATO) view on the implications of the alienation of personal services income (PSI) measures contained in Part 2-42 of the Income Tax Assessment Act 1997 (ITAA 1997) for deciding whether an individual is an employee within the meaning of the SGAA. The Ruling further considers whether an individual who holds an Australian Business Number (ABN) can be an employee for the purposes of the SGAA. The ruling also discusses arrangements or relationships which do not give rise to an employer/employee relationship.
6. It is proposed that when the final Ruling is issued, it will apply from the date of its issue.
7. This Ruling replaces SGR 93/1. SGR 93/1 is withdrawn from the date of issue of this Ruling.
9. Whether a person is an employee of another is a question of fact to be determined having regard to the key indicators expressed in judicial decisions which have considered the issue of whether a person is a common law employee. Defining the contractual relationship is often a process of examining a number of factors and evaluating those factors within the context of the relationship between the parties. No one indicator of itself is determinative of that relationship. The totality of the relationship between the parties must be considered.
10. The classification of a person as an employee for the purposes of the SGAA is not solely dependent upon the existence of a common law employment relationship. While the definition includes most persons who at common law would be regarded as employees, it also extends to certain persons who would not be regarded as employees at common law such as Members of Parliament.
11. 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 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.
12. If a partnership has contracted to provide services, then the person who actually does the work is not the employee of the other party to the contract. This is so even if the worker is a partner and even if the contract requires the partner to do the work. However, if partners contract outside the partnership in their own personal capacity to provide their labour to fulfil a contractual obligation, they can be an employee of the other party to the contract.
13. A partner in a partnership is not an employee of the partnership.
14. A person who holds an ABN may still be an employee for the purposes of the SGAA.
15. The question of whether or not a person is an employee for SGAA purposes is not determined by reference to whether the person is a full-time, part time or casual worker.
16. The application or otherwise of the PSI measures in Part 2-42 of the ITAA 1997 is not determinative of whether an individual is an employee within the meaning of section 12 of the SGAA.
17. An arrangement between parties that is structured in a way that does not give rise to a payment for services rendered but rather a payment for something entirely different, such as a lease or a bailment does not give rise to an employer/employee relationship for the purposes of the SGAA.
18. Under the SGAA, employers are required to make superannuation contributions into a complying superannuation fund or Retirement Savings Account for the benefit of their eligible employees in accordance with minimum prescribed levels. If an employer does not make the required superannuation contributions, they will be subject to the Superannuation Guarantee Charge (SGC). If an individual is not an employee as defined in the SGAA or is an employee but is otherwise exempted from the application of the SGAA by a specific provision, an employer will not have a potential liability for the SGC.
19. The SGAA defines 'employee' in section 12. The definition is both a clarifying and extending provision. Subsection 12(1) defines the term 'employee' as having its ordinary meaning - that is, its meaning under common law. If a worker is held to be an employee at common law, then they will be an employee under the SGAA (unless one of the limited exceptions in subsections 12(9A) and (11) applies).
20. Apart from stating that 'employee' has its ordinary meaning, the SGAA does not list the indicators that may be considered in determining whether a worker is an employee at common law. In most cases, it will be self-evident whether an employer/employee or a principal/independent contractor relationship exists. However, it is sometimes difficult to discern the true character of the relationship from the facts of the case as the intentions of the parties may be unclear or ambiguous, such as where the terms of the contract are disputed by the parties or are otherwise in apparent conflict. Because of these difficulties, the ordinary meaning of employee has been the subject of a significant amount of judicial consideration. These cases have discussed a number of indicators that may be applied in determining whether an individual is a common law employee.
21. If it is considered that the relationship at common law is one of principal and independent contractor or the determination of the status of the worker is unclear, the extended definition of 'employee' in the SGAA must be considered. The SGAA also has two provisions which exclude certain workers from being employees for SGAA purposes, even if they otherwise would be employees.
22. The relationship between an employer and employee is a contractual one. It is often referred to as a contract of service. Such a relationship is typically contrasted with the principal/independent contractor relationship that is referred to as a contract for services. An independent contractor typically contracts to achieve a result whereas an employee contracts to provide their labour (typically to enable the employer to achieve a result).
25. The features discussed below have been regarded by the Courts as key indicators of whether an individual is an employee or independent contractor at common law.
28. For example, an employer may seek to change the status of an employee to that of independent contractor by both parties signing a contract of engagement that includes a clause to the effect that the worker is an independent contractor rather than an employee. That clause is ineffective if it is inconsistent with the apparent true nature of the relationship inferred from the contract as a whole. If the terms of the subsisting relationship are not changed, it is likely that the worker's status would remain that of an employee.
31. The mere fact that a contract may specify in detail how the contracted services are to be performed does not necessarily imply an employment relationship. In fact, a high degree of direction and control is not uncommon in contracts for services. The payer has a right to specify how the contracted services are to be performed, but such control must be expressed in the terms of the contract; otherwise the contractor is free to exercise their discretion (subject to any terms implied by law). This is because the contractor is working for themselves.
32. Under a contract of service, on the other hand, the employer has an implied right, within the limits imposed by industrial relations laws, to direct and control the work of an employee. This is because the employee is working in the employer's business and the owner of a business has the right (within the confines of applicable law) to manage that business as the owner sees fit.
33. Therefore, while control is important, it is not the sole indicator of whether or not a relationship is one of employment.[F18] The approach of the Courts has been to regard it as one of a number of indicia which must be considered in determination of that question.
38. While the majority did, in reaching its decision, consider lawful authority to command (that is control) and other relevant aspects of the relationship between the parties, it at the same time was concerned with the fundamental question of whether the worker was operating their own business or was operating within Vabu's business. Therefore, whenever applying the indicators of employment listed in this ruling it is also necessary to keep in mind the distinction between a worker operating on his or her own account and a worker operating in the business of the payer.
41. In contracts to produce a result, payment is often made for a negotiated contract price, as opposed to an hourly rate. For example, in Stevens v. Brodribb, payment was determined by reference to the volume of timber delivered, and in Queensland Stations where it was a fixed sum per head of cattle delivered.
42. While the notion of 'payment for a result' is expected in a contract for services, it is not necessarily inconsistent with a contract of service, for example, in contracts for commission only sales. [F26] Accordingly, the other terms of the contract must still be considered to determine the true character of the relationship between the parties.
43. The power to delegate (in the sense of the capacity to engage others to do the work) is a factor in deciding whether a worker is an employee or independent contractor.[F27] If a person is contractually required to personally perform the work, this is an indication that the person is an employee.
44. If a person is contractually entitled to delegate the work to others, then this is an indication that the person is an independent contractor. Under a contract for services, the emphasis is on the performance of the agreed services (achievement of the 'result'). Unless the contract expressly requires the service provider to personally perform the contracted services, the contractor is free to arrange for his or her employees to perform all or some of the work or may subcontract all or some of the work to another service provider.
45. A common law employee may frequently 'delegate' tasks to other employees, particularly where the employee is performing a supervisory or managerial role. However, this 'delegation' exercised by an employee is fundamentally different to the delegation exercised by a contractor outlined above. When an employee asks a colleague to take an additional shift or responsibility, the employee is not responsible for paying that replacement worker, rather the workers have merely organised a substitution or shared the work load. This is not delegation consistent with that exercised by a contractor.
46. Where the worker bears little or no risk of the costs arising out of injury or defect in carrying out their work, they are more likely to be an employee. [F28] On the other hand, an independent contractor bears the commercial risk and responsibility for any poor workmanship or injury sustained in the performance of work. An independent contractor often carries their own insurance and indemnity policies.
52. Further, an employee, unlike an independent contractor, is often reimbursed (or receives an allowance) for expenses incurred in the course of employment, including for the use of their own assets such as a car.
53. In addition to the above, other indicia of the nature of the contractual relationship have been variously stated and have been added to from time to time. [F35] Those suggesting an employer-employee relationship include the right to suspend or dismiss the person engaged, [F36] provision of benefits such as annual, sick and long service leave[F37] and the provision of other benefits prescribed under an award for employees.
55. If it is determined that an individual is an employee within the ordinary or common law meaning of the term, they will be an employee for the purposes of the SGAA (unless one of the exceptions in subsections 12(9A) and (11) applies).
56. Although the term 'employee' has its ordinary meaning in the SGAA, subsections 12(2) to 12(11) list a number of further persons who are also treated as employees. These subsections deem persons who come within these subsections to be employees for the purposes of the SGAA, even if they are not common law employees and are clearly distinguishable from common law employees.
57. Under subsection 12(2) of the SGAA, a person who is entitled to payment for the performance of duties as a member of the executive body (whether described as the board of directors or otherwise) of a body corporate[F39] is, in relation to those duties, an employee of the body corporate.
58. In the majority of circumstances, such a person will be called a 'director'. The SGAA will apply even if the person is not referred to as a director but falls within the terms of subsection 12(2).
59. Subsection 12(3) of the SGAA provides that if a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party of the contract. Whenever a contract is formed with an individual to perform work, the first test is always to determine if a contract of service exists and only if the answer to that question is negative, is the 'wholly or principally' for labour issue considered.
60. The words 'wholly or principally' are used to limit or restrict the types of contracts that will be covered by subsection 12(3). To the extent that a contract is partly for labour and partly for something else (for example, the supply of goods, materials or hire of plant or machinery), it will qualify only if it is 'principally' for labour.
61. In the context of subsection 12(3), the word 'principally' assumes its commonly understood meaning, that is, 'chiefly' or 'mainly'.
64. Both subsection 12(3) of the SGAA and paragraph (a) contain the identical phrase '...under a contract that is wholly or principally for the labour of the person...'.
65. In the High Court decision in Neale, it was decided that, for a payment to fall within paragraph (a) of the 'salary or wages' definition, it was necessary that the contract require the person to whom the payment was made to perform the work personally and that if the contract left it open for the person to engage someone else to perform it, it was not a payment to which paragraph (a) applied. Rather, it was a contract to produce a given result.
68. As subsection 12(3) of the SGAA uses the expression 'wholly or principally for labour', the Tax Office considers that the meaning given to the phrase by the authorities cited in the context of paragraph (a) of the definition of 'salary or wages' in subsection 221A(1) of the ITAA 1936 applies to the application of subsection 12(3).
69. Despite the restriction that has been placed on the meaning of the phrase 'wholly or principally for the labour of the person', the obiter dicta in the judgments in Neale and World Book left open the possibility of the application of paragraph (a) (and by extension subsection 12(3) of the SGAA) to independent contractors.
the contract is considered to be wholly or principally for the labour of the contractor and he or she will be an employee under subsection 12(3).
73. Further, certain labour hire arrangements as described below whereby labour hire firms supply or provide the services and labour of workers to client organisations are considered by the Tax Office to come within the scope of subsection 12(3).
76. Members of the Commonwealth House of Representatives and of the Senate, members of State Legislative Assemblies and Legislative Councils, members of the Northern Territory and Australian Capital Territory Legislative Assemblies are not common law employees because they have no identifiable employer. [F50] None of the usual indicators of an employer/employee relationship, such as an express or implied contract of employment, ability to direct activities or exercise control over the employee, apply to members.
77. However, the members in question are specifically incorporated into the definition of employee in the SGAA by virtue of subsections 12(4) to 12(7).
79. One clear limitation on these words is that the active participation of the artist or sportsperson is required. If not, it could not be said that the person is 'paid to perform or present' the activity. A painter, for instance, does not perform or present a painting exhibition. They merely produce the works used in the exhibition. Therefore, even though the products of their work can form part of, for example, a display, people such as painters and photographers do not usually come within the scope of paragraph 12(8)(a).
80. That the word 'similar' is used also shows clearly that 'activity' is limited to things of a like kind. We consider that the activities covered by paragraph 12(8)(a) are those which derive their artistic or sporting content from the performance or presentation because that is the common thread running through the listed activities.
82. These paragraphs are not limited in the way that subsection 12(3) is limited to contracts wholly or principally for a person's labour. However, it is necessary that the particular person is actually paid to provide services rather than for some other purpose. For example, a person engaged to write a script is performing services but one who sells existing scripts is not - they are merely selling property.
83. 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.
84. A person who holds, or performs the duties of, an appointment, office or position under the Constitution or under a law of the Commonwealth, of a State or of a Territory is an employee by virtue of paragraph 12(9)(a) of the SGAA. Similarly, a person who is otherwise in the service of the Commonwealth, the State or of a Territory, including service as a member of the Defence Force or as a member of the police force is an employee of the Commonwealth, State or the Territory, as the case requires: paragraph 12(9)(b).
85. The wording in subsection 12(9) of the SGAA is very similar to the wording contained in paragraphs 12-45(1)(b), (c), and (d) of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953). Taxation Ruling TR 2002/21[F51] provides comprehensive guidance on the interpretation of the wording contained in those paragraphs. A similar interpretation applies for the purposes of interpreting subsection 12(9) of the SGAA.
86. Under section 12 as originally enacted, a person who held an office as a member of a local government council was regarded as an employee of the council and the payments they received (allowances and sitting or member fees) were regarded as 'salary or wages' for SGAA purposes. However, amendments were made to the SGAA by Taxation Laws Amendment Act (No 2) 1995 to exclude local government councillors and the payments they receive in the course of their duties from the definition of 'employee' and 'salary or wages' contained in the SGAA. Accordingly, subject to subsection 12(10) of the SGAA, a person who holds office as a member of a local government council is not an employee of the council.
87. Under subsection 12(10), a person who is a member of an 'eligible local governing body' (as that term is defined in section 221A of the ITAA 1936) is an employee for the purposes of the SGAA. An eligible local governing body is a local governing body that made a resolution which, in effect, brought the remuneration of its members into the old PAYE system. The effect of subsection 12(10) is to also bring those members into the Superannuation Guarantee system.
88. Subsection 12(11) of the SGAA provides that a person who is paid to do work wholly or principally of a domestic or private nature for not more than 30 hours per week is not an employee in relation to that work. A person who is paid to do work of this nature for more than 30 hours per week may or may not be an employee depending on whether they fall within the other provisions of section 12, as discussed above.
89. The terms 'private' and 'domestic' are not defined in the SGAA so it is necessary to refer to the ordinary meaning of the words.
90. The Macquarie Dictionary (third edition) defines 'domestic' to mean 'of or relating to the home, the household or household affairs' and 'private' to mean 'belonging to oneself', 'being one's own', 'individual or personal'.
92. Although this case was about losses or outgoings of a private nature we think it also illustrates the similar concept of work of a domestic or private nature. In our view, work of a domestic or private nature ordinarily means work relating personally to the individual making payment for the work or to the person's home, household affairs or family organisation.
93. For example, people employed by someone to clean their home, to mind their children, to effect repairs or maintenance of their home, or to tend their home garden would be engaged in domestic or private work. If they worked for that person for not more than 30 hours a week, they would not be that person's employee under the SGAA.
96. An individual other than a partner engaged by the partnership to perform work for the partnership may be an employee of the partnership, depending on the circumstances of the contractual arrangement.
98. The alienation measures will not apply where the income is derived in the course of conducting a personal services business. [F58] The object of Division 87 of the ITAA 1997 is to define personal services businesses to ensure the alienation measures do not apply to legitimate independent contractors. A number of tests are set out for determining if the income is from the conduct of a personal services business.
99. It is recognised that there is some overlap between the tests used to determine whether a personal services business exists, particularly between the 'results test'[F59] and the common law tests used to distinguish independent contractors and employees. However, section 84-10 of the ITAA 1997 ensures that the application of the alienation measures to an individual does not make the individual an employee for the purposes of the SGAA. [F60] Whether or not an individual is subject to the PSI measures is distinct from and separate to the determination of whether that individual is an employee within the meaning of section 12 of the SGAA.
100. There are circumstances in which the relationship between a person who engages another to perform work and the person engaged does not give rise to a payment for services rendered or provision of labour but rather a payment for something entirely different, such as a lease or 'bailment'. In these circumstances, a person enters into a lease or bailment for the use of property owned by another person, and the payments are made from the lessee or bailee to the lessor or bailor. Consequently, the lessee or bailee, rather than being a provider of services to the owner of the asset, acquires a right to exploit that asset for their own benefit in return for a 'rental' payment to the owner.
101. A common form of bailment relationship is that of owner and taxi driver. In the taxi industry, some taxi drivers who operate under a bailment arrangement make a payment to the owner allowing them to use the taxi to drive. These payments may take the form of lease payments or a percentage of shift takings. In FC of T v. De Luxe Red and Yellow Cabs Co-operative (Trading) Society Ltd & Ors,[F61] the Full Federal Court held that a taxi licence owner and taxi drivers were not in a relationship of employer and employee within the meaning of those terms in section 12 of the SGAA. The relationship was rather one of 'bailment', even though the licence owner had a degree of control over the drivers' work.
103. The fact that an individual has an ABN does not prevent that individual from also being engaged as an employee in another role or position. Someone who carries on a business or trade in their own right other than as an employee might also at certain times perform work for another as an employee. For instance, a mechanic may have an ABN because the activities he undertakes as a mechanic in sole practice amount to an enterprise. He may also be an employee because he is employed on weekends by the local hotel as a barman. Ultimately, in the common law context, each individual contract entered into by an individual must be examined to determine whether, on balance, the individual is engaged as an employee or independent contractor.
104. Moreover, an individual with an ABN may undertake a contractual engagement as an independent contractor and still be an employee for SGAA purposes. This is because, as discussed, the scope of the SGAA is extended beyond common law employees.[F63] For example, a sole trader who has an ABN may be an employee under subsection 12(3) of the SGAA if they have been contracted wholly or principally for their labour.
105. We invite you to comment on this draft Superannuation Guarantee Ruling. Please forward your comments to the contact officer by the due date.
3 Commissioner of Payroll Tax (Vic) v. Mary Kay Cosmetics Pty Ltd 82 ATC 4444, per Gray J.
4 Stevens v. Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16; (1986) 63 ALR 513 (Stevens v. Brodribb) at CLR 29; ALR 521, per Mason J. The principle that the 'totality of the relationship between the parties' be considered to determine the nature of the contractual relationship at common law was adopted with approval by the majority of the High Court in Hollis v. Vabu (2001) 207 CLR 21 (Hollis v. Vabu).
5 Abdalla v. Viewdaze Pty Ltd t/as Malta Travel  53 ATR 30 (Abdalla v. Viewdaze). The Full Bench of the Industrial Relations Commission provided a summary of the state of the law governing the determination of whether an individual is an employee or independent contractor following Hollis v. Vabu.
11 (1989) 34 IR 179 at 184.
12 Australian Mutual Provident Society v. Chaplin and Anor (1978) 18 ALR 385 at 389-390.
13 For example, Reardon Smith Line Ltd v. Yngvar Hansen-Tangen (1976) 1WLR 989 at 997 per Lord Wilberforce; and Codelfa Construction Pty Ltd v. State Rail Authority of New South Wales (1982) 149 CLR 337 at 347-352; (1982) 41 ALR 367 at 371-375; (1982) 56 ALJR 459 at 461-463 per Mason J.
14 Roy Morgan Research Centre Pty Ltd v. Commissioner of State Revenue (Vic) 96 ATC 4767 at 4772-4773; (1996) 33 ATR 361 at 366-367 per Byrne J. This decision was affirmed by the Court of Appeal (97 ATC 5070; (1997) 37 ATR 528) and an application for special leave to the High Court was refused.
15 Stevens v. Brodribb (1986) 160 CLR 16 at 24, per Mason J and CLR 35, per Wilson and Dawson JJ.
16 Stevens v. Brodribb (1986) 160 CLR 16 at 24, per Mason J and CLR 36, per Wilson and Dawson JJ. In Stevens v. Brodribb, the High Court was adjusting the notion of 'control' to modern industrial conditions and, in doing so, continued the developments in Zuijs v. Wirth Brothers Pty Ltd (1955) 93 CLR 561 and Humberstone v. Northern Timber Mills (1949) 79 CLR 389. The control test as articulated in Stevens v. Brodribb was cited and adopted with approval by the majority of the High Court in Hollis v. Vabu.
17 (1949) 79 CLR 389 at 404.
18 For example, Stevens v. Brodribb (1986) 160 CLR 16 at 24, per Mason J.
19 Hollis v Vabu (2001) 207 CLR 21 at 44-45.
20 Hollis v Vabu (2001) 207 CLR 21 at 39, per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ.
21 The notion of an 'integration' test arose in Montreal v. Montreal Locomotive Works 20 (1947) 1 DLR 161 at 169 and was affirmed by Lord Denning in Stevenson Jordan and Harrison Ltd v. MacDonald and Evans  1 TLR 101 at 111 and reaffirmed in Bank Voor Handel En Scheepvaart NV v. Slatford  1 QB 248 at 295.
22 Hollis v. Vabu at (2001) 207 CLR 21 at 41.
24 World Book (Australia) Pty Ltd v. FC of T 92 ATC 4327 at 4334. Sheller JA referred to the High Court decision in Queensland Stations Pty Ltd v. FC of T (1945) 70 CLR 539; (1945) 19 ALJ 253; (1945) 8 ATD 30; (1945) ALR 273 (1945) (Queensland Stations) as authority for that proposition. He also used the facts of that case as an example of a contract to produce a result. Note that, given the emphasis that the courts have placed on the control test (discussed above), the production of a given result is probably not the mark of an independent contractor but merely a mark.
25 Neale v. Atlas Products (Vic) Proprietary Limited (1955) 94 CLR 419 at 424-425.
26 Federal Commissioner of Taxation v. Barrett and Ors 73 ATC 4147; (1973) 4 ATR 122.
27 See for example, Australian Mutual Provident Society v. Chaplin and Anor (1978) 18 ALR 385 at 391 and Stevens v. Brodribb at (1986) 160 CLR 16 at 26, per Mason J and at CLR 38, per Wilson and Dawson JJ.
28 In Hollis v. Vabu, Vabu undertook the provision of insurance for the couriers and deducted the amounts from their wages.
29 Stevens v. Brodribb at (1986) 160 CLR 16 at 36, per Wilson and Dawson JJ.
30 Abdalla v. Viewdaze  53 ATR 30, at paragraph 34.
31 See, for example, Stevens v. Brodribb and Vabu Pty Ltd v. FC of T 96 ATC 4898; (1996) 33 ATR 537 (Vabu Pty Ltd v. FC of T).
32 (1986) 160 CLR 16 at 37, per Wilson and Dawson JJ.
33 Per Rich J at CLR 548.
34 (2001) 207 CLR 21 at 41. The High Court was referring to the NSW Court of Appeal taxation decision in Vabu v. FC of T where it was held that the couriers engaged by Vabu (including those who provided motor vehicles and motor cycles) were independent contractors. The majority decision in Hollis v. Vabu overturned that decision insofar as bicycle couriers were concerned.
35 Stevens v. Brodribb (1986) 160 CLR 16 at 36, per Wilson and Dawson JJ.
37 Stevens v. Brodribb (1986) 160 CLR 16 at 24, per Mason J.
38 Hollis v. Vabu (2001) 207 CLR 21 at 42, per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ.
39 'Body corporate' is a general term to describe an artificial entity having a separate legal existence.
40 Deputy Commissioner of Taxation v. Bolwell (1967) 1 ATR 862 at 873.
41 Neale v. Atlas Products (Vic) Pty Ltd (1955) 94 CLR 419 (Neale); Case V158 88 ATC 1030; World Book (Australia) Pty Ltd v. FC of T 92 ATC 4327 (World Book) and Filsell v. Top Notch Fashions Pty Ltd 94 ATC 4656.
42 Paragraph 221A(2)(b) was intended to apply where the person who was paid actually performed, or could reasonably be expected to perform, the whole or principal part of the labour under the contract. That is, a right of delegation that was not, or was not reasonably expected to be, acted upon other than in minor respects would be insufficient to take the contract outside the scope of the expression.
43 World Book 92 ATC 4327 at 4334.
44 (1955) 94 CLR 419 at 425.
45 92 ATC 4327 at 4334; (1992) 23 ATR 412 at 419-420.
46 The view that the contracts in labour hire arrangements are not 'results' contracts is supported by cases including Construction Industry Training Board v. Labour Force Ltd  3 All ER 220; Building Workers' Industrial Union of Australia and Others v. Odco Pty Ltd (1991) 29 FCR 104 and Drake Personnel Ltd & Ors v. Commissioner of State Revenue (2000) ATC 4500. In these cases, the workers supplied by the labour hire firm to the end users of labour were paid an agreed rate per hour for the hours worked and there was no evidence, either express or implied, which suggested that the workers could delegate their contractual work.
47 SGR 93/2 - Independent agencies: service firms, labour hire firms and employment agencies.
49 Brinkley v. FCT 2002 ATC 2053 at 2057.
50 See, for example, State Chamber of Commerce and Industry & Ors v. The Commonwealth of Australia (1987) 163 CLR 329. See also Taxation Ruling TR 1999/10 Income Tax and fringe benefits tax: Members of Parliament - allowances, reimbursements, donations and gifts, benefits, deductions and recoupments, at paragraph 36.
51 Taxation Ruling TR 2002/21, Income Tax: Pay As You Go (PAYG) Withholding from salary, wages, commissions, bonuses, or allowances paid to office holders.
52 Incorporated limited partnerships are a body corporate with a separate legal personality from the partners, for example, see section 84 of the Partnerships Act 1958 (Vic).
53 Rose v. Federal Commissioner of Taxation (1951) 84 CLR 118.
54 Stubbs v. Lakos (1994) 56 IR 110.
55 Ellis v. Joseph Ellis & Co  1 KB 324.
56 Section 84-5 of the ITAA 1997.
57 A number of taxation rulings discuss the personal services income measures. They include TR 2001/7 - Income Tax: the meaning of personal services income; TR 2001/8 - Income Tax: what is a personal services business; TR 2003/6 - Income Tax: Attribution of personal services income; TR 2003/10 - Income Tax: deductions that relate to personal services income.
58 Division 87 of the ITAA 1997.
59 Which is set out in section 87-18 of the ITAA 1997.
60 Section 84-10 of the ITAA 1997 states that the application of Part 2-42 to an individual does not imply, for the purposes of any Australian law or any instrument made under an Australian law, that the individual is an employee.
61 98 ATC 4466; (1998) 82 FCR 507.
62 This is subject to certain exceptions stated in paragraph 38(2)(a) of the ABNA.
63 Employee is not otherwise defined in the ABNA so it takes its common law meaning.

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