tax

Question

i am a merchandiser, paid on invoice @ agreed rate. i quote an abn. should the companies i work for pay me super, or can i claim a deduction if i pay into my own super. i am 53

thanks
julie

Answer

Subsection 12(3) of the SGAA provides that if a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party of the contract. . The words ‘wholly or principally’ are used to limit or restrict the types of contracts that will be covered by subsection 12(3). To the extent that a contract is partly for labour and partly for something else (for example, the supply of goods, materials or hire of plant or machinery), it will qualify only if it is ‘principally’ for labour. In the context of subsection 12(3), the word ‘principally’ assumes its commonly understood meaning, that is, ‘chiefly’ or ‘mainly.
Subsection 12(3) was intended to extend the scope of the SGAA beyond traditional employment relationships to take into account some independent contractors who principally provide their own labour to meet obligations under a contract. The Second Report of the Senate Select Committee on Superannuation, Superannuation Guarantee Bills , noted that subsection 12(3) was ‘designed to include a person who may not be an employee in the normal sense but who is in fact not very distinguishable from an employee.’
There is an exception if you are paid to produce a result. This would involve not being paid an hourly rate but paid on results. This cannot be a mere sham substitute for an hourly rate but if you have the ability to increase your profit or loss by your own ingenuity or lack there of you maybe considered to be paid to produce a result. An example in your case would be if you were paid a set amount to persuade a set number of people to buy your product.
Another exception is when your contract allows you to delegate to other people.
So if you are paid wholly or principally for your personal labour and skills and the contract requires you to personally perform the tasks and you are not paid to produce a result. Then your employer should be making superannuation contributions for you and even if they don’t you are still not permitted to claim a tax deduction for the superannuation contributions you make because nevertheless you are entitled to employer support.
Maybe you should suggest your employer reads SGR 2005/1