Private ruling: Superannuation
Date of advice: 20 January 2026
Published: 9 March 2026

Ruling: Q1: Where a person is not a current employee, does the receipt of a grant create an employer-employee relationship for the purposes of section 12 of the Superannuation Guarantee (Administration) Act 1992 (SGAA)? | A1: No

Relevant facts and circumstances: The Department administers five grants which are incentive programs in relation to students completing a degree in education. Each grant provides financial assistance to eligible students completing various stages of teacher education. Grant A Grant A provides a payment to support eligible preservice teachers completing their final required practical placement in a state-run school. To be eligible for Grant A, an applicant must: • be completing the final year of an undergraduate teaching degree or a postgraduate teaching qualification; and • be undertaking the final compulsory placement of at least 15 consecutive school days in a state-run school. Additional eligibility considerations include: • placements in non-government schools are not eligible; • international students lawfully residing and permitted to study in Australia may apply; • students participating in a permission-to-teach arrangement may apply if all other criteria are met. Successful applicants receive a written Grant A Offer, formalising the grant offer. The Grant A Offer outlines the placement details underpinning the offer, including placement dates, host school, whether the location is considered a priority area, the grant amount, and instructions for accepting the offer. • The grant is intended to assist with placement-related expenses such as transport, accommodation, meals, and incidentals. • Applicants are encouraged to seek financial advice on any potential income-related implications. Acceptance requires completion and return of a personal details form, which confirms the applicant has read and accepted the conditions of payment. Conditions for Payment include obligations to: • maintain enrolment in the relevant teacher education course; • complete the placement at the approved state-run school for the approved duration; • comply with Department policies; and • notify the Department immediately of any changes to placement dates, location, mode, or circumstances. The offer may be revoked, or payment terminated, if conditions are not met. Where a placement is cancelled, rescheduled, or terminated, repayment of some or all of the grant may be required, subject to a show-cause process. Grant B Grant B provides a payment to students undertaking their final practicum within an approved early childhood education setting. • Eligibility includes being a resident of the jurisdiction, enrolling in an approved early childhood qualification, and completing at least 15 consecutive days of placement during specified periods in an approved early childhood service. • If fewer than 15 days are completed, the amount is pro-rated. • Students completing placement in certain outer-regional or remote locations may receive an additional payment. Grant C Grant C financially supports recent Year 12 graduates who achieve a high academic ranking and enrol in an approved initial teacher education Grant. • Eligible students receive a lump-sum payment, or a payment for rural or remote residents, during their first semester to support study-related costs. • Eligibility criteria include completing secondary studies within the jurisdiction, meeting the required academic threshold, and enrolling in an approved higher-education teaching qualification. • The Department does not guarantee future employment to recipients. Grant D Grant D provides financial support to preservice teachers completing placements in specified rural or remote state-run schools. • Varying payments determined by the number of placement days completed. • Eligibility requires enrolment in later-year undergraduate teaching studies or early years of postgraduate teaching studies. Payment amounts are linked to placement duration. A sample Grant D Offer was provided and aligns with the structure and conditions described for Grant A. Grant E Grant E supports preservice teachers completing placements in designated regional or remote state-run schools. • Varying payments pro-rated to placement duration. • Eligibility aligns with the same study-year requirements as Grant D. • Students participating in a permission-to-teach arrangement may be eligible if criteria are met. Payment amounts are linked to placement duration. A sample Grant E Offer was supplied, which is materially consistent with the Grant A Offer. Assumptions Grants are not considered to be FBT benefits.

Relevant legislative provisions: Superannuation Guarantee (Administration) Act 1992 section 12 Other ATO documents | Superannuation Guarantee Ruling SGR 2005/2 Superannuation guarantee: work arranged by intermediaries

Reasons for decision: Summary: The SGAA imposes a superannuation guarantee charge which is then reduced according to the level of superannuation contributions made by the employer. The definition of 'employee' for the purposes of the SGAA is found in section 12, which is both a clarifying and extending provision. Subsection 12(1) of the SGAA states that 'employee' and 'employer' take their ordinary or common law meaning. Where the relationship between the parties to a contract is not a common law employment relationship, or there is doubt in respect of the status of a person the expanded meaning of 'employee' is contained in subsections 12(2) to 12(11) of the SGAA. The key provision of relevance in this case is subsection 12(3). For a worker to be an employee under subsection 12(3) of the SGAA, three elements must be satisfied: a. There must be a contract (written or otherwise); and b. that contract must be wholly or principally for the labour of a person; and c. that person works under that contract. | Detailed Reasoning - Ordinary meaning of 'employee': Subject to section 12(1) of the SGAA, the terms ' employee ' and ' employer ' have their ordinary meaning for the purpose of that Act. In some cases, it will be self-evident whether an employer and employer, or principal and independent contractor relationship exists. However, it is sometimes difficult to discern the true character of the relationship as the contract or contracts between the parties may be unclear or ambiguous, or because the terms are disputed by the parties or are otherwise in apparent conflict. The relationship between an employer and employee is a contractual one. When a business engages a worker, generally it will either be a relationship of employment (commonly referred to as a contract of service), or a principal/independent contractor relationship (referred to as a contract for services). The leading case on the ordinary meaning of ' employee ' is Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd (' Personnel Contracting '). In that decision, the High Court confirmed that whether a worker is an employee of a putative employer is a question of fact, to be determined by an objective assessment of the legal rights and obligations that constitute the relationship. Accordingly, the totality of the relationship is determined by the legal rights and obligations created by the contract between the parties, construed at the time the contract is entered into. Where the parties have comprehensively committed the terms of their relationship to a written contract, and the contract has not been varied, challenged as a sham or subject to legal or equitable relief, then it is the legal rights and obligations in that contract alone that are relevant in this analysis. | Detailed Reasoning - Extended meaning of employee pursuant to subsection 12(3) of the SGAA: Under subsection 12(3) of the SGAA, a person who works under a contract that is wholly or principally for their labour, will be an employee of the other party to the contract. As expressed by the Full Federal Court in Dental Corporation v Moffet ('Moffet') , for 12(3) of the SGAA to apply: • There must be a contract, • that is wholly or principally for the labour of a person, • under which a person works. In considering the first element, we must consider whether a contract has been formed. While contract law can be complex, Superannuation Guarantee Ruling SGR 2005/2 Superannuation guarantee: work arranged by intermediaries details the Commissioner's views on contractual engagements in the context of employment law. Relevantly, SGR 2005/2 provides: 34. The relationship between an employer and an employee is contractual. An employment relationship cannot exist in the absence of a contract. The indicators listed by the courts in determining whether a contract is one of employment can only be applied once it is determined that a contract exists. They cannot be applied to determine whether a contract exists in the first place. The issue of whether a contract exists is a separate and distinct matter from the categorisation of a contract as one of employment or otherwise. ... 36. Determining whether a contract exists is a matter of applying the ordinary principles of contract law. An agreement between parties will not be given effect by the courts as a legally enforceable contract unless a number of elements are present. In particular: • the parties must intend to be legally bound by their agreement; • there must be an offer by one party and its acceptance by the other; and • the promises which constitute the agreement must be supported by consideration (unless the agreement is in the form of a deed). ... 38. The contract may be written, it may be partly written and partly oral, it may be wholly oral or it may even be implied from the parties' actions. Further details can be found in SGR 2005/2, including authorities which underpin key contract law concepts, which we will not replicate here beyond what is necessary to answer the question. | Detailed Reasoning - Application to Grant A: 1. We consider that where a recipient has applied to receive Grant A and been found eligible, a valid contract has been formed. a. In first considering whether the parties intend to be legally bound by their agreement, we note that: i. The 'Letter of Offer' contains Condition of Payment provisions where it specifically states "this agreement is between the Department And "The preservice teacher". ii. There is the inclusion of termination clauses in the 'Letter of Offer' with an ability for the preservice teacher to 'show cause' as to why their grant should not be revoked if they fail to meet their obligations. iii. There appears to be no limit on the number of recipients to the extent that should an applicant meet the eligibility criteria they will receive the grant. iv. We consider this criteria is satisfied. b. In considering whether there has been an offer by one party, and acceptance by the other, we note that: i. Where a person applies to receive Grant A, and that application is accepted, the Department issues a 'Letter of Offer' to the applicant. ii. To accept the offer in the offer letter, the applicant must complete their personal details and return that letter to the Department. iii. We consider this criteria is satisfied. c. On whether there is consideration, we note that: i. The doctrine of consideration requires that something must be given in return for a promise in order to make it binding. ii. In this case, the Department promises a monetary amount to the Applicant for completing a placement in an in-scope school (identified in the Applicant's application) for a minimum number of days. iii. We consider this criteria is satisfied. In general, where the criteria for the formation of a contract are satisfied for the purposes of Grant A, those criteria will similarly be satisfied for the other grants. This is because the processes by which the grants are applied for and accepted are, in substance, the same. Any variations are either not material to the determination of whether a contract has been formed or have been specifically identified. Accordingly, the analysis has not been repeated for each grant payment unless this was necessary We next considered whether the contract was wholly or principally for the labour of a person. Although eligibility for payment required a placement to be undertaken in a school, we consider that, on balance, the facts indicate the contract was not principally for the labour of the recipient. We have based our view on the following facts. a. Labour is required irrespective of whether the grant is paid. To be eligible for the grant, the applicant must be completing their final year of an accredited initial teacher education program and must have organised to undertake their final professional experience placement in a school for a minimum of 15 days. Notably however, agreeing to undertake such a placement doesn't guarantee eligibility to, or payment of, the grant. b. While not necessary, there doesn't appear to be a tangible link between the payment amount and the performance of work. The amount of the grant is fixed, and while there is a minimum of 15 days of placement required to be eligible, further work doesn't entitle the applicant to any further payment. The applicant may even have completed the placement prior to applying for the grant. c. Conversely, the grant is ostensibly provided to assist applicants with placement-related expenses. For example: i. the relevant Letter of Offer provides that applicants should keep placement-related expense receipts, and ii. the agreement further provides that the Department may recoup some or all of the grant. In such circumstances, the recipient may show cause as to why a portion of the grant should be retained, having regard to expenses already incurred. As it is our view that the contract is not for the labour of the person, and subsection 12(3) of the SGAA is therefore not satisfied, it is not necessary to form a position on whether the applicant in this case works under the contract. For completeness however, we note that the applicant is required under the terms of the agreement to complete a placement period, and to complete the period themselves (requiring their own personal efforts). Therefore, we consider that the applicant in this case does work under the contract. | Detailed Reasoning - Application to the Grant B: Generally, in line with the analysis above, we do not consider a recipient of Grant B to be employees of the Department pursuant to subsection 12(3) of the SGAA. The eligibility criteria under Grant B are further confined to applicants who have completed their placement. In our view, while there is an offer and acceptance, this timing restriction directly impacts whether any contract that has been formed is in relation to that placement. We consider that there is likely a unilateral offer from the Department to any applicant who meets the conditions of eligibility to make an application, but there is no information on whether every application will be approved if the eligibility criteria are met or whether there is a selection process. This is an important aspect, as if there is unlimited capacity to approve based on completion of the conditions being met then there is a unilateral offer, and it can be found that there is an intention to be bound by the Department. Further, it will provide clarity on when the contract in fact arises. | Detailed Reasoning - Application to Grant C: Generally, in line with the analysis above, we do not consider recipient of Grant C to be employees of the Department pursuant to subsection 12(3) of the SGAA. The application process for Grant C requires that the applicant meet the eligibility requirements prior to lodging an application. The main eligibility requirements are that the applicant be a Year 12 graduate in the year ended 31 December 20XX and have obtained an ATAR of 88.75 or above. There are a limited number of grants, being a maximum of 50 for $xxx and a further 5 for $xxx if other conditions are met. While there is an offer by the Department of a grant payment, it is a limited offer, which the applicant accepts by submitting an application through the process outlined in the fact sheet published by the Department. However, the Department has no intention to be bound to their offer unless an applicant's application is successfully chosen through the Department's selection process. As such, a contract may only exist with the 50 successful applicants whom the Department chooses to receive the grant. Ultimately, however, in relation to those successful applicants, any such contract is not one of employment as there is no requirement for the applicant to provide any labour, result or benefit to the Department in return. The recipient is only required to meet the preconditions of achieving an appropriate ATAR and enrolling in an education degree at university. As such, subsection 12(3) of the SGAA does not apply. | Detailed Reasoning - Application to Grants 4 and 5: The conditions and requirements for Grants 4 and 5 are similar and will be discussed together. Noting the general principles of contract formation we have discussed above, and considering the alignment between these grants (which, in our view only diverge in particulars not relevant to an assessment of whether subsection 12(3) applies), we have considered both grants together. We consider that, for these grants, there is: a. an intention to be bound - the Department agrees to make the payment to successful applicants, where those applicants have satisfied the grant eligibility criteria, b. an offer and acceptance - the Department offers the grant to prospective applicant, with acceptance occurring through the application by the applicants, assessment of eligibility and payment of the grant, and, c. consideration - the Department receives engagement in the regional and rural school system by aspiring teacher applicants, and the applicants receive cash consideration to assist with expenses they would otherwise incur in undertaking placement. For reasons consistent with those outlined above, we consider that the contract in respect of these grants is not wholly or principally for the labour of the recipient. Specifically, and consistent with the criteria of Grant A, the recipient is required to undertake a placement in a school regardless of whether the grant is paid. Further, the amount of the grant is not calculated by reference to the period or extent of work performed and instead appears to be directed toward the reimbursement of expenses rather than remuneration for labour. In respect of the rate of pay, we acknowledge that the rate of payment does vary in line with the period of work undertaken. For example, for Grant 4, a placement of 15-19 days receives an amount of $xxx and a placement of 40 plus days receives an amount of $xxx. This demonstrates, however, that the first 19 days of placement are ostensibly paid at almost double the rate of the next 20 days. Further, there is no additional payment for any period of service in excess of 40 days. In respect of the reimbursement of expenses, and noting our comments above, the payment of the grant in our view much more closely resembles a larger initial payment to reimburse an applicant for their initial expenses in a regional or rural area, and the latter payment to cover any further maintenance expenses the applicant incurs as the placement period continues. As it is our view that the contracts are not for the labour of the person, and subsection 12(3) of the SGAA is not satisfied, it is not necessary to form a position on whether the applicant in this case works under the contract. | Detailed Reasoning - Conclusion for all grants: Where the recipient is a current employee of the Department, receipt of a grant will not alter their status as an employee of the Department. In such cases, the Department will be required to pay superannuation guarantee on the payment. Where the recipient is not a current employee of the Department, the grant recipient will not be deemed to be an employee of the Department under section 12 of the SGAA.