Private ruling: Superannuation guarantee obligations
Date of advice: 5 July 2019
Published: September 2019

Ruling: Facts | The principal had an agreement with a company to provide management services. | The agreement stated the company would provide the worker to provide the contract services. | The company had to provide all insurances and the agreement couldn't be subcontracted or assigned without the consent of the principal. | The principal provided all facilities for the worker. | The company invoiced the principal and charged GST. | Summary | The facts and evidence suggest that the worker was not an employee of the principal for the purposes of the SGAA under the common law test or the extended definition as set out in subsection 12(3) of the SGAA. The principal did not have an obligation to pay superannuation contributions on behalf of the worker. | Detailed reasoning | Superannuation Guarantee Ruling SGR 2005/1 Superannuation guarantee: who is an employee? ('SGR 2005/1') explains when an individual is considered to be an 'employee' under section 12 of the SGAA. | Paragraph 13 of SGR 2005/1 provides the following with respect to arrangements where an individual performs work for another party through an interposed entity: | 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 the 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. | Superannuation Guarantee Ruling, Superannuation guarantee: work arranged by intermediaries (SGR 2005/2) which explains the Commissioner's view of how definitions of 'employer' and 'employee' in the SGAA apply to contractual working arrangement involving three (or more) parties. | Relevantly, paragraph 12 states: | 12. If there is no contract between the worker and the end user in a tripartite working arrangement, the worker cannot be an employee of the end-user... | Paragraph 17 states: | 17. If a worker is not contracted personally to perform work or services but via an interposed entity such as a company or trust, neither the end-user nor the intermediary is the employer of the worker, because any contract they have is with the interposed entity and not the worker. The worker may be the employee of the interposed entity. | Based on the information provided, the worker was engaged by the principal through a written agreement with the company. The agreement specified that the company would receive an agreed upon sum to be paid in instalments based on the quality of the work provided. | Therefore the legal relationship or agreement is between the principal and the interposed entity as evidenced by the agreement and not between the worker and the principal. Consequently, the worker was not an employee of the principal. | As per above, in accordance with paragraph 13 of SGR 2005/1, there is no employer-employee relationship between the worker and the principal for the purposes of the SGAA under the extended definition of employee. This is because the principal has entered into an agreement with a company rather than the individual.