ATO Interpretative Decision
ATO ID 2002/376 (Withdrawn)
Superannuation
Superannuation guarantee scheme: employment statusFOI status: may be released
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This ATO ID is withdrawn as the interpretative issue is covered in Superannuation Guarantee Ruling SGR 2005/1This document has changed over time. View its history.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is there an employer-employee relationship between the employer company and its delivery truck drivers for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA) and, therefore, a requirement on the employer to pay superannuation contributions on behalf of the drivers?
Decision
Yes. Based on the facts, the company is an employer of the permanent drivers for the purposes of the SGAA and, therefore, is required to make payments for superannuation purposes on behalf of their employees. The company is not the employer of the other casual drivers who are working through other companies, in partnership or as sole traders.
Facts
The company contracts drivers and their vehicles to deliver goods. The company hires permanent drivers who only work for them. The company also hires other casual drivers who work for them on a needs basis and who also work for other companies and/or in partnership or as sole traders.
The drivers provide their own vehicles for the work and are required to cover all costs associated with the running of the vehicles.
The drivers are paid a fixed rate per hour on the number of hours worked. There are no set finishing times.
The company makes no provision for annual or sick leave for the drivers but it does pay workers compensation.
Prescribed Payments are withheld from the drivers' payments.
The drivers meet at a set time each morning to collect the goods for delivery, which are allocated to the drivers depending on the capacity of their vehicles and the location of the delivery.
The drivers are not instructed which way to travel to the delivery location or as to what order the deliveries are to be made, but it is stipulated that the orders are to be made that day.
If a driver is not able to work on a particular day, the company organises someone else to deliver the goods; the drivers are not permitted to delegate work.
The company is responsible for the goods carried by the drivers.
Reasons for Decision
Subsection 12(1) (SGAA) states that the terms 'employee' and 'employer' have their ordinary meaning. Subsection 12(3) (SGAA) states that where a person works under a contract wholly or principally for the labour of the person, the person is an employee of the other party to the contract. These subsections have to be interpreted in light of the decisions of the courts to determine whether a person is considered to be an employee.
In Vabu Pty Ltd v FCT (1996) 96 ATC 4898; 33 ATR 537 (Vabu), the Supreme Court of NSW, on appeal, held that courier drivers engaged by a courier company were independent contractors and were neither 'common law employees' nor 'employees' under subsection 12(3) (SGAA). This case can be distinguished from Vabu by the degree of control exercised over the permanent drivers.
By taking into account the degree of control it we consider that the permanent drivers are 'common law employees'. The degree of control over the permanent drivers is indicated by the following factors:
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- monitoring of time taken for drivers to perform deliveries;
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- the day starts at a set time and the goods are required to be delivered on the day;
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- drivers are paid a fixed rate per hour based on the number of hours worked;
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- drivers are covered by workers compensation;
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- drivers cannot profit from their enterprise; and
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- drivers cannot suffer liability for damage to the goods they transport.
As the permanent drivers are employees within the definition, the company is an employer for Superannuation Guarantee purposes and will be required to make superannuation contributions in order to avoid a shortfall for SGAA 1992 purposes.
The drivers, who work in a partnership, through a company or as a sole trader, are not considered to be employees of the delivery company. Therefore, no payments, for superannuation purposes, need to be made by the company for those drivers.
Date of decision: 11 August 1998
Legislative References:
Superannuation Guarantee (Administration) Act 1992
subsection 12(1)
subsection 12(3)
Case References:
Vabu Pty Ltd v FCT
(1996) 96 ATC 4898
33 ATR 537
Related Public Rulings (including Determinations)
Superannuation Guarantee Ruling SGR 93/1
Other References:
Previously released as CDS10374
Keywords
Superannuation guarantee charge
Superannuation guarantee scheme
ISSN: 1445-2782
| Date: | Version: | |
| 11 August 1998 | Original statement | |
| You are here | 3 February 2006 | Archived |
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