Private ruling: Superannuation guarantee
Date of advice: 9 August 2017
Published: November 2017

Ruling: Q2: Are the Workers 'prescribed employees’ of the Principal in accordance with paragraph 27(1)(d) of the SGAA and therefore exempt from receiving employer superannuation guarantee contributions? Advice Yes. Please refer to our 'reasons for decision’.

Relevant facts and circumstances: 1. The Principal is a Country A based company delivering specialist services in brand communications, digital marketing, contact centre outsourcing, data science, PR and lending risk. 2. The Principal has acquired Australian subsidiary companies. 3. The Principal has sent X senior employees from Country A to Australia in order to implement and execute the global strategic goals and branding of the acquired entities. They have been nominated by the Principal’s Australian subsidiary company. 4. The Workers are foreign nationals and have been appointed to various roles. 5. The roles are full time positions. 6. Senior Officer 1’s principal duties and responsibilities include: ● The execution of the international strategic goals and plan of the Principal’s business to the Australian subsidiaries. ● Identifying target companies for the business to acquire and negotiating the terms of such acquisitions. ● Identifying and pursuing strategic projects and initiatives as approved by the Board from time to time in support of: ● The development of new products and services that differentiate Principal’s proposition and earnings in Australia ● The development of new markets where the Principal’s products and services are applicable. ● Identifying and developing key partnerships for the distribution of the Company’s products and services in Australia. ● Senior Officer 1 reports directly to the Group Executive Officer in Country A. ● Senior Officer 1 will support, train and guide the local Australian team in areas including operations, finance, forecasting and budgets. ● Senior Officer 1 will maintain the existing responsibilities in respect of the Country A entity, in supporting initiatives and setting new strategic objectives. 7. Senior Officer 2’s principal duties and responsibilities include: ● Preparation of the Global brand strategy and continuing development and implementation across domestic and international markets. ● As part of a 'one company’ strategy, rebranding and implementation of the global brand strategy to the acquired Australian subsidiaries. ● Delivering a cohesive brand identity for the Principal including the management of the Australian team, appointment of creative and PR agencies and oversee the continued application of the brand strategy post departure. ● Responsibility for advertising and attending events and seminars. ● Responsibility for the trademark and IP protection globally. ● Management of the brand implementation in Australia, reporting directly to the Executive team in Country A. ● Strategic programmes and brand policy development - Responsibility to develop and deliver a campaign plan to launch and promote the Principal’s products and platforms in Australia. ● Working directly with the Executive Officer and Operating Officer on the broader strategic direction of the business. ● Senior Officer 2 reports directly to the Group Executive Officer of the Principal in Country A 8. The Workers undertake their duties in Australia on a 'Temporary Business Entry (Class UC) – Temporary Work (Skilled) subclass 457 visa.


Reasons for decision: Summary: 9. Based on the facts and evidence provided, the Workers are prescribed employees of the Principal for the purposes of paragraph 27(1)(d) of the SGAA. Therefore, the Principal does not have an obligation to pay SG contributions on behalf of the Workers. | Detailed Reasoning - Question 1: Are the Workers employees of the Principal for the purposes of section 12 of the SGAA? 10. The SGAA states that an employer must provide the required minimum level of superannuation support for its employees or pay the Superannuation Guarantee Charge (SGC). 11. The definition of employee under section 12 of the SGAA includes a common law employee and extends to include workers who are engaged under a contract wholly or principally for their labour under subsection 12(3). This employment relationship is often referred to as a 'contract of service’. Superannuation Guarantee Ruling SGR 2005/1 Superannuation guarantee: who is an employee? distinguishes this relationship from a 'contract for service’ which is typically a contractor and principal type of relationship which does not attract an SGC liability. 12. SGR 2005/1 outlines the various indicators the courts have considered in establishing the ordinary meaning of an employee. These include: ● Delegation : the worker can't subcontract/delegate the work – they can't pay someone else to do the work ● Basis of payment : the worker is paid for the time worked; a price per item/activity; a commission ● Control : the principal has the right to direct the way in which the worker does their work ● Equipment and tools : the principal provides all or most of the equipment, tools and other assets required to complete the work ● Commercial risks : the worker takes no commercial risks. The principal is legally responsible for the work done by the worker and liable for the cost of rectifying any defect in the work. ● Independence : the worker is not operating independently of the employer. They work within and are considered part of the business. 13. The Workers are both hired under a full-time employment contract with the Principal. In accordance with the contract they: ● cannot delegate their roles and duties ● are paid a monthly salary including holiday/sick/pension entitlements ● are under the direct control of and report to the CEO of Principal ● are restricted from working for any other employer ● devote their whole working time, knowledge and skills to the performance of their duties ● do not work independently of the business, with all copyrights, designs and developments remaining the property of the Principal 14. Based on the facts and evidence outlined above it is concluded that the Workers are common law employees of the Principal for the purposes of section 12 of the SGAA. They will also meet the extended definition of an employee under subsection 12(3) of the SGAA by working under a contract that is wholly or principally for the labour. This is because as they are: ● remunerated by the Principal either wholly or principally for their personal labour and skills ● perform the contractual work personally for the Principal (there is no right of delegation) ● not paid to achieve a result | Detailed Reasoning - Question 2: Are the Workers 'prescribed employees’ of the Principal in accordance with paragraph 27(1)(d) of the SGAA and therefore exempt from receiving employer superannuation guarantee contributions? 15. Subsection 27(1) of the SGAA excludes certain salary and wages from the calculation of an employee’s SG shortfall. Paragraph 27(1)(d) excludes salary or wages paid to an employee who is a 'prescribed employee’. 16. Subregulation 7(1) of the Superannuation Guarantee (Administration) Regulations 1993 (SGAR) defines a 'prescribed employee’ as: (e) an employee who is the holder of a Subclass 457 (Business (Long Stay)) visa if: (i) the employee has been appointed by a company operating in Australia to be the national managing executive or deputy national managing executive or a state manager; and (ii) the employee was nominated as mentioned in paragraph 457.223(2)(c), (4)(d) or (5)(d) of Schedule 2 to the Migration Regulations 1994 or identified as mentioned in subparagraph 457.223(3)(b)(i) of that Schedule; (f) an employee who is the holder of a Subclass 457 (Business (Long Stay)) visa if: (i) the employee holds a position as a senior executive of a company operating in Australia; and (ii) the employee was nominated as mentioned in paragraph 457.223(2)(c), (4)(d) or (5)(d) of Schedule 2 to the Migration Regulations 1994 or identified as mentioned in subparagraph 457.223(3)(b)(i) of that Schedule; and (iii) the employee's position carries substantial executive responsibility; and (iv) the employee's qualifications for the position are appropriate; and (v) the employee's position is a full-time position; 17. Regulation 1.03 of the Migration Regulations 1994 provides that a Subclass 457 (Business (Long Stay)) visa includes a Subclass 457 (Temporary Work (Skilled)) visa. The Workers currently hold 'Temporary Business Entry (Class UC) – Temporary Work (Skilled) (subclass 457)’ visas. 18. The Workers have been appointed by a company operating in Australia to the roles of 'Senior Officer 1’ and 'Senior Officer 2. Senior Officer 1 is the most senior person of the Principal in Australia and will not report to the local Australian team. Senior Officer 1 reports directly to the group Chief Executive Officer in Country A. Senior Officer 1 will support, train and guide the local Australian team in areas including operations, finance, forecasting and budgets. 19. Senior Officer 1 occupies a full-time senior executive role which entails substantial executive responsibilities. The duties performed by Senior Officer 1 are substantial executive responsibilities. Notably, Senior Officer 1 is responsible for the overall strategy and direction of the Australian entity. 20. Senior Officer 2 is responsible for the preparation of the Principal’s Global brand strategy and implementing this strategy to the acquired Australian subsidiaries. In delivering a cohesive brand, the Senior Officer 2 is responsible for developing and delivering a campaign plan to launch and promote the Principal’s data products and platforms, trademark and IP protection globally and the appointment of employees and PR agencies as required to sustain and execute the changes after departing. Given the autonomy of the role, Senior Officer 2 will manage the brand implementation in Australia, reporting only to the Chief Executive Officer in the Country A. 21. The Senior Officer 2 occupies a full-time senior executive role which entails substantial executive responsibilities. Notably, Senior Officer 2 is accountable for the overall marketing of the brand name and reputation of the Principal both in Australia and overseas, along with the management of the public relations and investor expectations. 22. For the purposes of paragraph 7(1)(e) of the SGAA, The Workers’ roles are considered equivalent to national managing executives, and they have been nominated in accordance with paragraph 457.223(2)(c) of Migration Regulations 1994 . 23. For the purposes of paragraph 7(1)(f) of the SGAA, the Workers hold full-time positions as senior executives of a company operating in Australia, and they have been nominated in accordance with paragraph 457.223(2)(c) of the Migration Regulations 1994 . The job function requirements and description indicates that their positions carry substantial executive responsibility, and the qualifications they hold are appropriate for the position. 24. The Workers have satisfied the requirements for a prescribed employee, subsequently the Principal is excluded from paying SG contributions on their behalf under paragraph 27(1)(d) of the SGAR. | Detailed Reasoning - We took these laws in to account: Superannuation Guarantee (Administration) Act 1992 section 12 Superannuation Guarantee (Administration) Act 1992 section 27 Superannuation Guarantee (Administration) Regulations 1993 regulation 7 Migration Regulations 1994 regulation 1.03 Migration Regulations 1994 regulation 457.223 | Detailed Reasoning - We followed these ATO view documents: Superannuation Guarantee Ruling SGR 2005/1 Superannuation guarantee: who is an employee?

Are the Workers employees of the Principal for the purposes of section 12 of the Superannuation Guarantee (Administration) Act 1992 (SGAA)? | This advice applies for the following period: 22 December 2016 to 30 June 2021