Under the Superannuation Guarantee (Administration) Act 1992, employers are required to provide superannuation guarantee (SG) contributions for their employees, subject to limited exemptions. Employers who don’t pay the minimum amount of SG for their employees into the correct fund by the due date may have to pay the super guarantee charge (SGC).
While this law is clear, who is an employee isn’t and there are many instances when a business does not pay the SG contributions, believing that there is no employer-employee relationship. The recent case of Scone Race Club Limited highlights that the definition of employee for SG purposes is broader.
Scone Race Club Limited, which we can refer to as “the Club”, operates a racecourse in the rural town of Scone in the Upper Hunter region of New South Wales. Between 1 July 2009 and 30 June 2014 (inclusive – the Relevant Period), the Club paid fees to jockeys in respect of the riding in horse races and barrier trials (riding fees). On and from 1 July 2000 and throughout the Relevant Period, per their regulations LR 72(1) : Clubs shall pay such fee for a jockey or apprentice jockey in consideration for their riding a horse in a race or a barrier trial as may be set from time to time by the Board.
After the expiry of the Relevant Period, an amendment was made to LR72 such that, on and from 1 July 2014, it provides, “Clubs shall at the direction of Racing NSW pay, on behalf of the owners of a horse” the riding fees and “nothing in… LR72(1) makes Clubs personally liable for those fees”.
The Commissioner of Taxation formed the view that, during the Relevant Period, the Club ought to have been making superannuation contributions in relation to the riding fees that it was paying to jockeys. The Commissioner argued that the Club committed a superannuation guarantee shortfall, as per the Superannuation Guarantee (Administration) Act 1992.
The Court ruled in favour of the Commissioner, agreeing that SRC is liable to pay riding fees to jockeys for riding in a horse race and is therefore deemed to be the jockeys’ employer for the purpose of the SG legislation.
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