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The Administrative Appeals Tribunal has overturned a previous decision by the ATO which found the worker was an employee and therefore entitled to superannuation.
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Plumbing business wins appeal in super guarantee charge case
03 October 2024
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In a recent decision, The Trustee for the Peter Hatfield Trust and Commissioner of Taxation, the Administrator Appeals Tribunal found that a plumber engaged by a plumbing business, Peter Hatfield Plumbing, was a contractor and not an employee of the business.
The case concerned notices of assessment of superannuation guarantee charge (SGC) issued to the plumbing business by the ATO.
The Commissioner of Taxation had determined that the relationship between Peter Hatfield Plumbing and the plumber was that of employer and employee for the purposes of the SGAA.
The plumber, Mr Hargreaves, contacted the ATO in March 2021 stating that he considered he was an employee of Peter Hatfield Plumbing.
The ATO contacted the plumbing business to advise it was conducting an audit of the business to ascertain whether it had met its SG obligations.
Following the audit, the ATO advised the plumbing business that it considered the relationship between the business and Hargreaves to be one of an employer and employee under superannuation law and the business therefore had an obligation to pay superannuation contributions.
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Peter Hatfield Plumbing then applied to the AAT for a review of the ATO’s decision.
The tribunal set aside the ATO’s decision, concluding that Hargreaves was not an employee of the applicant under the extended definition contained in subsection 12(3) of the Superannuation Guarantee (Administration) Act 1992.
In her decision, AAT senior member Dominique Grigg said the deed of control that may be exercised over a worker is a “prominent factor in determining the nature of the relationship”.
“As a skilled, licensed plumber Mr Hargreaves was expected to perform the task at his discretion without supervision,” Grigg said.
“Mr Hargreaves advertised his services outside of his relationship with the Applicant. The evidence indicates Mr Hargreaves was operating his own business.”
The AAT also noted that there was also evidence that Hargreaves performed work for others independently of the applicant.
It also noted that he could refuse to do work and that the rate of pay was negotiated and nearly double the award rates.
Hargreaves also lodged BAS for his business and claimed expenses he incurred while performing jobs for the applicant through his business.
The tribunal concluded that Peter Hatfield Plumbing had discharged its onus of proving that it was not the employer of Hargreaves during the relevant periods and set aside the decision under review.
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