This Decision of the Administrative Appeals Tribunal (AAT) is a series of decisions against five jockey racing clubs brought by the Australian Taxation Office (ATO) regarding whether the racing clubs must pay super contributions on behalf of jockeys under the Superannuation Guarantee (Administration) Act 1992 (SG Act).

It is (reasonably) well known that section 12(3) SG Act extends super contribution obligations beyond common law employees to capture a person (contractor) who works under a contract that is “wholly or principally for the[ir] labour”. See this case for an example decision.

A less well-known extension of super contribution obligations is found in 12(8) of the SG Act, which covers where a person who is paid to perform or present, or to participate in the performance or presentation of, any […] sport, […]. That provision provides that such (sport) person is deemed to be “an employee of the person liable to make the payment” (bold emphasis added). It was the use of the word “liable” which was the key contention in this case.

In the year 2000, a “Stakes Payment System” (SPS) was introduced to act as a clearing house for funds flowing to and from stakeholders in the NSW thoroughbred racing industry. The SPS involved among other things a “riding fee” paid to the jockeys, which would be part of the overall remuneration package on behalf of the owner of the horse (or trainer as the case may be) alongside a percentage of race winnings.

Although the racing club would operate the SPS as a mere clearing house, where the underlying payment relationship in substance is between the jockey and the owner of the horse they ride, the 2019 Full Federal Court decision of Scone Race Club was followed here such that if the racing club as clearing house is liable to make the payment, putting to the side that the payment may be “on behalf of” the horse owner and may be recoverable by the racing club against the horse owner, then the racing club itself is caught under section 12(8) and is obligated to also pay superannuation guarantee payments for the jockey’s racing fee payments.

It was also found by the AAT that:

Multiple employers for one activity is not contemplated by the SG Act. The use of “the person” as opposed to “a person” in section 12(8) of the SG Act, and that if subsection 12(8) does not cover that arrangement, section 12(3) still needs to be considered” means that only one person can be liable at the same time for the payment for the same performance – in this case it is the racing club, but it could be clarified whether the owner in future is the sole person liable to the exclusion of the racing club.
This does not necessarily mean that a person could not be deemed an employee under both subsections 12(3) and 12(8) of the SG Act (i.e. the application of each subsection is not mutually exclusive, unlike the payment liability point above). Therefore only the application of one subsection is required to succeed for the superannuation guarantee obligations to apply.

This case is an important reminder, not only for the expansive nature of super guarantee arrangements, but the importance of determining, particularly where “clearing house arrangements” exist, who is liable for any payments made for sporting, artistic and other performances, who will also therefore be liable for accompanying super guarantee payments.

Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au

Terence Wong
Senior Associate
T +61 3 9611 0112 l M +61 0458 846 022
E twong@sladen.com.au