Superannuation Guarantee Determination SGD 97/1







1. Generally, no. A partner would not be an employee of the company for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA) if the partner: | 2. It is common practice for a partner in a professional partnership, such as accounting or legal firms, to be appointed as a director of a client company or a public company. The appointment is usually considered to be another service provided by a professional partnership or an extension of the usual business activities of the partnership, and is made because of the partner's connection with the partnership. Often, the partner is also required to obtain the approval of the other partners to accept the appointment as director. The partnership agreement usually provides that directors' fees received by partners are to be paid into the partnership account. | 3. The appointment as director is therefore either as agent for the partnership, in accordance with the partnership laws of the States and Territories, or resulted from the opportunity arising from membership of the partnership. Any directors' fees received by the partner are received in the capacity as trustee for the partnership. The directors' fees are income derived by the partnership and not by the individual director or partner. | 4. As the partner is not an employee in the above circumstances, the company engaging the director or the partner does not have to pay any superannuation contributions under the SGAA. | 5. However, in the case where an appointment as a director is unrelated to the partner's membership of the partnership, the appointed partner is beneficially entitled to any directors' fees. The partner is an employee of the paying company for the purposes of the SGAA, notwithstanding any agreement to pay the directors' fees over to another entity or person. | Withdrawal of SGD 93/10: 6. This Determination replaces SGD 93/10 which is withdrawn from the date of this Determination. | Commissioner of Taxation 26 February 1997


Related rulings: TD 97/2
Legislative references: SGAA
Subject references: directors; nominee; partners