Private ruling: Superannuation relating to Artists
Published: December 2014

Ruling: Q1: Is there an obligation for an employer to provide superannuation guarantee support for an artist who is paid to create an artistic piece for location in an outdoor public display? | A1: No. Refer to 'Reasons for decision'



Reasons for decision: Summary: Generally, an employer is liable to pay superannuation to eligible employees, where that employment is undertaken in Australia. An individual's superannuation obligation is calculated by applying the percentage rate (currently 9.5%) to the total ordinary time earnings (OTE) paid by the employer to the employee for the quarter. This is in accordance with Part 3 of the Superannuation Guarantee (Administration) Act 1992 (SGAA) and subject to certain exclusions. Section 12 of the SGAA defines who is an employee for the purposes of making superannuation guarantee payments. The definition states that the terms 'employer' and 'employee' take on their ordinary meaning in the context of an employment relationship and relates to a contract of service, rather than a contract for service. In addition to this common law definition of an employee, section 12 extends the meaning to encompass other persons. Persons involved in the performing arts, sportspersons, entertainers, promotional activities and the like are employees. In particular, the persons specifically identified as employees are covered under subsection 12(8) 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. In each of these cases, the employer is liable to make the payment. It is clear from paragraph 12(8)(a) that the active participation of the artist or sportsperson is required, otherwise the person is not "paid to perform or present" the activity, they are just being paid to produce something. An example of this is of an artist who has been asked to produce a painting for a display in an exhibition. Paragraph 12(8)(a) uses the word 'similar' to limit the activity to those having a nature like those mentioned in the definition. The common theme in paragraph (a) is that the activities are of a short duration or is applicable for a finite period of time. For example, a sprinter competing in a 100 metre sprint event. The 'activity' is the physical performance in the 100 metre sprint event. This contrasts with a painting for instance, which is on display and enjoyed for a much longer period of time. The same principle applies to other short-lived performances or presentations such as a dance, promotional activity or entertainment (for example, circus performance). In summary, therefore, the types of activities covered by paragraph 12(8)(a) are limited to short-lived performances or displays of a creative or sporting nature which involve the active participation of the artist or sportsperson. This means that most painters, journalists, photographers, artists and authors will not be covered under paragraph 12(8)(a). However, these professionals may still be employees for superannuation guarantee purposes, as the requirements outlined in paragraphs 12(8)(b) and (c) don't require the person to actively participate in the display or activity. For example, a signwriter asked to create an advertising sign for a specific event (who is not an employee under paragraph 12(8)(a) because they are not an active participant in any performance or presentation) may be considered an employee under paragraph 12(8)(b) if they are paid for services in connection with a promotional activity or display. The Commissioner's view in relation to how subsection 12(8) applies is contained in Superannuation Guarantee Ruling 2005/1 'Who is an employee', specifically paragraphs 83 - 88. Paragraph 88 states: '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'. The Commissioner considers that there are superannuation guarantee obligations in respect of a person who is paid for services in connection with an activity. The artist is paid to create an artistic piece to be located in an outdoor display. The display is a permanent fixture, and the artistic piece is not being created for a specific promotional event or activity, but is to be enjoyed by the public on a long term basis. Therefore, although the artist is considered to be providing a service, there is no 'activity' attached to it. As such the artist is not considered to be an employee under paragraph 12(8)(b) of the SGAA. Therefore superannuation guarantee support is not payable.