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19 Jan 11 Provider of community support services not entitled to SGC exemption - Newton

The Federal Court (Emmett J) has held, on appeal from the AAT, that the taxpayer, who carried on the business of providing community support services to her clients, was not exempt from liability under the Superannuation Guarantee (Administration) Act 1992 (the Act) by virtue of the provisions of s 12(11) of the Act.

The clients of the taxpayer were persons who were disabled, infirm, elderly or otherwise in need of physical assistance in their own homes. The services provided to such clients included cooking, cleaning, shopping, showering, dressing and general household duties. The services also included assistance with shopping. However, the services provided by the taxpayer were not provided physically or personally by the taxpayer herself but rather by employees of the taxpayer.

The taxpayer did not make superannuation contributions in respect of 21 of the workers who provided services to clients of the taxpayer in the year ended 30 June 2001. His Honour said that "it was common ground, for the purposes of the present appeal, that each of the 21 workers in question did work for clients of the taxpayer that can fairly be characterised as being of a domestic or private nature. It is also common ground that the 21 workers did not do that work for more than 30 hours per week. It appears that there was no evidence as to whether any of the 21 workers in question did work in any week for more than one household, such that the worker did work in total for more than 30 hours per week."

Section 12(11) of the Act provides as follows:

"A person who is paid to do work wholly or principally of a domestic or private nature for not more than 30 hours per week is not regarded as an employee in relation to that work."

The Commissioner argued that Parliament was not intending to relieve a labour hire business, or other businesses that provide domestic services for clients, from liability for the superannuation guarantee charge. In contrast, the taxpayer argued that it is the nature of the work that is done, and not the identity of the payer who pays for the work to be done, that is significant.

In finding for the Commissioner, his Honour seems to have been influenced by anomalies that he felt could arise if an employee who did relevant work for not more than 30 hours per week for any given household in fact did work for more than 30 hours for two or more households. The relevance of this to the Commissioner's argument is not clear but, in the event, his Honour found that there was an error of law in the AAT's construction of s 12(11), and he remitted the matter to the AAT to be determined in accordance with his reasons.

FCT v Newton [2010] FCA 1440 (Federal Court, Emmett J, 21 December 2010).

 


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