Hello ATO,
From what I have seen of other questions asked in the Community you are likely aware there is serious confusion within the LMA (Live Music Industry) (specifically the Live Music Industry as opposed to theatre and other related activities) in regard to Superannuation liabilities for musicians, entertainers, or performers.
For decades, I have been aware of SGAA section 12(8)(a) and the deeming provisions. Initially I thought this section of that act was a mis-carry over by ATO when gst was introduced and they dropped section 221(A,2,c) from the old Income Tax Assessment Act (Musicians taxation). In other words, you deleted it from one act but forgot to delete it from the other.
For years, Superannuation has not surfaced as an issue within the LMA because frankly it would not pass the ATO's own tests on what makes a contractor an employee. I considered that the ATO knew that and never pursued the matter.
However, it has now become a major issue within the market that I work in (Sydney, NSW) with mass confusion and incorrect information being broadly circulated amongst musicians, venue operators (Hospitality Industry), and in NSW - "agents", "venue representatives", and "entertainment industry hirers". For your reference, refer to the Entertainment Industry Act NSW 2013 (Definitions). I would provide the link but I'm not sure what your blog allows to pass.
My question is - Will the ATO provide a definitive (Industry wide) guidance/ruling/assessment that confirms when a musician or entertainer or performer is to be considered an employee and not a contractor?
To that end I would like you to consider 2 separate scenarios;
- Anne is a musician who is available for performances as a stringed instrument player. She is engaged to perform music in a theatre orchestra for a season run of performances by a show producer. Anne is instructed on clothing to wear, her hours for performances and rehearsals, she is provided with sheet music which she must adhere to. She does not to provide and tools to complete her performance other than her own instrument. Her work does not require a vehicle to transport gear, nor is there any requirement on her to publicise her performances. There could be other factors but these outline her crucial duties for the show production.
- Tom is a Musician/Entertainer that provides musical and vocal services to hirers to render solo performances, mainly in hospitality venues (hotel, clubs, restaurants). Tom performs in various venues across a month (could be 20 or so different venues). Tom provides this service to any hirer that contacts him and he is not obligated to any one hirer. In order to provide the performance Tom must provide the following; his own Public Address system, his own transport to and from the place of performance (which can be any location across the metropolitan area or in different towns if a regional musician), he is required to maintain his own Social Media presence and promote his performances on those platforms, he is required to provide recorded music between his breaks in performance, and to carry his own public liability insurance. Tom will also have promotional images which he provides to hirers in order for them to promote his performance. Tom is also in full control as to the genre or style of music he plays and generally this will be in keeping with his "brand" which he has fostered through years of performances. Tom will be advised by a hirer on what time the performance starts and what time it finishes (usually 3 hours where they are on stage for 3 x 45 minute sets, or similar). Tom will quote his required fee which the hirer has the option to accept. Sometimes it is already established as to what the hirer's fee limit might be. In some cases, but not an industry standard, Tom may have to cancel and find a replacement to take over his gig (live performance).
Is Tom a deemed employee for the purposes of Superannuation Guarantee performances?
If so, please explain why?
If yes, what part of Tom's fee would be considered to be for his labour/skills? Noting that Tom provides a vehicle, a public address system, a marketing profile which is keeping with his brand and other aspects. he cannot provide the performance without these.
Not wanting to pre-empt the answer, but it does need to be in keeping with ATO's own guidance. See "Pete's Paints" - https://www.ato.gov.au/businesses-and-organisations/super-for-employers/work-out-if-you-have-to-pay-super/super-for-independent-contractors
I also do not believe that HCA decisions/judgments in CFMMEU v Personnel Contracting [2022] HCA 1 and ZG Operations v Jamsek [2022] HCA 2 will support the deeming provisions of SGAA 12(8)a in Tom's case above.
Tom cannot be both an employee and a contractor at the same time. There is no guidance as to what part of Tom's fee would be deemed wages should he be considered an employee and what part covers his insurances, transport, and equipment. It cannot be the total amount as that would not make sense.
In Anne's case it looks to be adequately covered by both deeming provisions and employee contractor testing obligations. She would be considered an employee for Superannuation purposes.
I look forward to your response on this matter.
Please note that I do not think a single response from Tailored Technical Advice Team to one business will assist in putting paid to the confusion currently abounding within the LMA. An overall Guideline would seem to me to be the most appropriate way forward.
Thank you for your time.
Regards,
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