ATO Interpretative Decision

ATO ID 2012/75 (Withdrawn)

Superannuation

• This ATO ID is withdrawn because it contains a view in respect of a provision of the Superannuation Guarantee Administration Act 1992 (SGAA 1992) that does not apply after the 2014-15 financial year. A new definition of 'Australia' was inserted into the SGAA 1992 with effect from the financial year commencing 1 July 2015 in line with the definition in section 960-505 of the Income Tax Assessment Act 1997. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for financial years up to and including 2014-15. For decisions in the 2015-16 and later financial years, see ATO ID 2015/24 Superannuation Guarantee: work done outside Australia.
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Issue

Is work done at sea at a location which satisfies all of the following:

•

it is outside the outer limits of the 'coastal sea' of Australia;

•

it is outside the outer limits of the 'coastal seas' of the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands;

•

it is outside the Joint Petroleum Development Area (within the meaning of the Petroleum (Timor Sea Treaty) Act 2003) [JPDA];

'work done outside Australia' for the purpose of subsection 27(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?

Decision

Yes. Work done at sea at such a location is 'work done outside Australia' for the purpose of subsection 27(1) of the SGAA.

Facts

The employee is not a resident of Australia.

The employee is employed by a company which is not a resident of Australia.

The employee's work is done at sea more than 12 nautical miles from the territorial sea baseline of Australia, although still within the limits of Australia's continental shelf.

The employee's work is done at sea more than 12 nautical miles from the territorial sea baseline of the Territory of Christmas Island.

The employee's work is done at sea more than 12 nautical miles from the territorial sea baseline of the Territory of Cocos (Keeling) Islands.

The employee's work is not done in the JPDA.

The salary or wages paid to the employee do not relate to employment covered by a certificate under section 15C of the SGAA (concerning International Social Security Agreements).

Reasons for Decision

Subsection 27(1) of the SGAA provides that certain salary or wages are not to be taken into account for the purpose of making a calculation under section 19 of the SGAA (concerning individual superannuation guarantee shortfalls).

The expression 'work done outside Australia' is used in paragraphs 27(1)(b) and 27(1)(c) of the SGAA. Paragraph 27(1)(b) of the SGAA relevantly refers to:

salary or wages paid to an employee who is not a resident of Australia for work done outside Australia (except to the extent that the salary or wages relate to employment covered by a certificate under section 15C).

What constitutes 'Australia' in the relevant context?

Under section 4 of the SGAA the application of that Act extends to the Territory of Cocos (Keeling) Islands and the Territory of Christmas Island, and has effect as if both those Territories were part of Australia.

Under section 4A of the SGAA the application of that Act also extends to the JPDA and has effect as if that Area were part of Australia. [However note that, pursuant to paragraph 27(1)(ca) of the SGAA, when the work in the JPDA is undertaken by an employee who is not an Australian resident, superannuation guarantee obligations will not apply in respect of salary or wages paid to the employee for that work (Explanatory Memorandum to the Petroleum (Timor Sea Treaty) (Consequential Amendments) Bill 2003, paragraphs 101 and 102)].

The SGAA does not contain a definition of 'Australia'.

Section 2 of the Acts Interpretation Act 1901 (AIA) provides that the AIA applies to all Acts, subject to subsection 2(2) of the AIA which provides that the application of the AIA (or a provision of that Act) to an Act (or a provision of an Act) is subject to a contrary intention.

Consistently with section 4 of the SGAA, section 2B of the AIA provides that in any Act:

Australia means the Commonwealth of Australia and, when used in a geographical sense, includes the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands, but does not include any other external Territory.

A note to the above definition in section 2B of the AIA refers the reader to section 15B of the AIA.

Subsection 15B(1) of the AIA provides:

An Act is taken to have effect in, and in relation to, the coastal sea of Australia as if that coastal sea were part of Australia.

Subsection 15B(2) of the AIA provides:

A reference in an Act to Australia, or to the Commonwealth, is taken to include a reference to the coastal sea of Australia.

Subsection 15B(3) of the AIA provides:

An Act that is in force in an external Territory is taken to have effect in, and in relation to, the coastal sea of the Territory as if that coastal sea were part of the Territory.

Subsection 15B(3A) of the AIA provides:

A reference in an Act to all or any of the external Territories (whether or not one or more particular Territories are referred to) is taken to include a reference to the coastal sea of any Territory to which the reference relates.

No contrary intention

Pursuant to subsection 2(2) of the AIA, where a contrary intention exists, the meaning of 'Australia' in an Act may be other than as provided under sections 2B and 15B of the AIA.

Rather than demonstrating any contrary intention, the effect of section 4 of the SGAA is consistent with the meaning of 'Australia' in section 2B of the AIA. Further, there is nothing to indicate an intention to exclude the operation of section 15B of the AIA for the purposes of the meaning of 'Australia' in the phrase 'work done outside Australia' as used in subsection 27(1) of the SGAA. That is, 'Australia' in that context includes the coastal sea of Australia and the coastal sea of each of the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands.

The inclusion of section 4A of the SGAA, which extends the application of the SGAA to the JPDA and provides that the SGAA has effect as if the JPDA were part of Australia, does not indicate any intention that the SGAA otherwise applies to locations outside the outer limits of the relevant coastal seas (and, for example, within the outer limits of Australia's continental shelf). The JPDA is partly within and partly outside the outer limits of Australia's continental shelf, but there is no indication that the SGAA would already have applied in part of the JPDA. Nor is there any discussion on such a point in the Explanatory Memorandum to the Petroleum (Timor Sea Treaty) (Consequential Amendments) Bill 2003 which inserted section 4A into the SGAA.

In this context it is significant that the SGAA is not listed in the Schedule to the Sea Installations Act 1987 (SIA) in order that the provisions of the SGAA apply in relation to sea installations installed, or being installed, in adjacent areas (broadly, comprising areas outside the outer limits of the territorial sea of Australia but within the outer limits of the exclusive economic zone or continental shelf) as if those areas were part of the Commonwealth.

Meaning of 'coastal sea'

Paragraph 15B(4)(a) of the AIA provides that, in section 15B, 'coastal sea' in relation to Australia, means:

•

the territorial sea of Australia; and

•

the sea on the landward side of the territorial sea of Australia and not within the limits of a State or internal Territory;

and includes the airspace over, and the sea-bed and subsoil beneath, any such sea.

Similarly, paragraph 15B(4)(b) of the AIA provides that, in section 15B, 'coastal sea' in relation to an external Territory, means:

•

the territorial sea adjacent to the Territory; and

•

the sea on the landward side of the territorial sea adjacent to the Territory and not within the limits of the Territory;

and includes the airspace over, and the sea-bed and subsoil beneath, any such sea.

Section 2B of the AIA defines 'territorial sea' as having the same meaning as in the Seas and Submerged Lands Act 1973 (SSLA).

Subsection 3(1) of the SSLA, in part, defines 'territorial sea' as having the same meaning as in Articles 3 and 4 of the United Nations Convention on the Law of the Sea done at Montego Bay on 10 December 1982 (the Convention).

Articles 3 and 4 of Section 2 of Part II of the Convention (as contained in the Schedule to the SSLA) read respectively:

Breadth of the territorial sea

Every State has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from baselines determined in accordance with this Convention.

Outer limit of the territorial sea

The outer limit of the territorial sea is the line every point of which is at a distance from the nearest point of the baseline equal to the breadth of the territorial sea.

Consistent with the right set out in Article 3, and pursuant to a power to do so set out in section 7 of the SSLA, the Governor-General made a proclamation declaring the outer limit of the territorial sea to be 12 nautical miles seaward of that territorial sea baseline (see Proclamation in Gazette No. S 297, Tuesday 13 November 1990).

[In some cases, the outer limit of the territorial sea is less than 12 nautical miles from the territorial sea baseline, due to the close proximity of two countries e.g. Australia and Papua New Guinea (Australian Treaty Series 1985 No 4 - Treaty between Australia and the Independent State of Papua New Guinea concerning Sovereignty and Maritime Boundaries in the area between the two Countries, including the area known as Torres Strait, and Related Matters).]

Conclusion

In the phrase 'work done outside Australia' as used in subsection 27(1) of the SGAA, 'Australia' is used in a geographical sense and extends to the outer limits of Australia's 'coastal sea'. Further, 'Australia' in that phrase also includes the Territory of Cocos (Keeling) Islands, the Territory of Christmas Island, the 'coastal sea' of each of those Territories, and the JPDA.

Work done outside those areas is 'work done outside of Australia' for the purposes of subsection 27(1) of the SGAA.

As a result, the salary or wages paid to the employee in this case is for 'work done outside of Australia' and so are not taken into account for the purpose of making a calculation under section 19 of the SGAA, due to the operation of paragraph 27(1)(b) of the SGAA.

Legislative References:
Superannuation Guarantee (Administration) Act 1992
   section 4
   section 4A
   section 15C
   section 19
   section 27
   subsection 27(1)
   paragraph 27(1)(b)
   paragraph 27(1)(c)
   paragraph 27(1)(ca)

Related Public Rulings (including Determinations)
Superannuation Guarantee Ruling SGR 2009/2

Related ATO Interpretative Decisions
ATO ID 2003/907
ATO ID 2010/46

Other References:
Explanatory Memorandum to the Petroleum (Timor Sea Treaty) (Consequential Amendments) Bill 2003 - paragraphs 101 and 102
United Nations Convention on the Law of the Sea (Montego Bay, 10 December 1982) - Articles 3 and 4 of section 2 of Part II
Australian Treaty Series 1985 No 4 - Treaty between Australia and the Independent State of Papua New Guinea concerning Sovereignty and Maritime Boundaries in the area between the two Countries, including the area known as Torres Strait, and Related Matters
Proclamation in Gazette No. S 297, Tuesday 13 November 1990 - outer limit of territorial sea

Keywords
Australian offshore areas
Superannuation guarantee charge
Superannuation guarantee scheme

Business Line:  Law and Practice

Date of publication:  17 September 2012

ISSN: 1445-2782