A recent decision of the Administrative Appeals Tribunal held that workers were not independent contractors (as was alleged by the taxpayer), but rather were employees. Consequently the taxpayer was liable to pay the superannuation guarantee charge. The case is Natalie Newton (trading as Combined Care for the Elderly) v Commissioner of Taxation (Newton).Maddocks Superannuation Team
You can read the case in full here on the Australasian Legal Information Institute Website.
The key issue for determination by the Administrative Appeals Tribunal was whether the workers were employees or independent contractors. The answer to that issue would determine whether the business was an employer and therefore liable to pay the SGC.
The Tribunal decided that the workers were employees and consequently the business was an employer under the expanded definitions contained in the Act. Therefore the business was liable to pay the SGC.
Factors which the Tribunal relied on included:
The contractual relationship between the business and the workers was described as being independent. Further, the workers had acknowledged that their role was one as independent contractors who were not entitled to any superannuation guarantee. Even so, section 12(3) of the Act provides that if a person works under a contract that is wholly or principally for the labour of the person, then the person is an employee of the other party to the contract. Consequently, in the absence of any evidence from the business that the contract was not "wholly or principally for the labour of the person", the workers were held to be employees for the purposes of the Act.
For questions or more information about the above article, please call Maddocks in Melbourne (03 9288 0555) and ask for a member of the Superannuation Team.
You can read earlier ClearLaw articles on HR topics here.
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Leigh is a partner in the Maddocks Tax & Revenue team.
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His advice covers both direct and indirect tax considerations.
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