When determining who they need to pay super contributions to, some clubs may believe that there is no obligation to pay this to contractors.

This is not always the case however and the Superannuation Guarantee (Administration) Act 1992 (Cth) (Super Act) gives a much-expanded definition of what an “employee” is for the purposes of super entitlements and a number of contractors will be covered.

Under section 12(3) of the Super Act, this includes where a person works under a contract that is wholly or principally for their labour e.g. payment is principally paid for work done by their own labour and skills, payment is mainly for their time etc.

Importantly, the definition provided for “employees” also includes the following under section 12(8)(a) of the Super Act:

A person who is paid to perform or present, or to participate in the performance or presentation of, any music, play, dance, entertainment, sport, display or promotional activity or any similar activity involving the exercise of intellectual, artistic, musical, physical or other personal skills is an employee of the person liable to make the payment.

As such, people who are engaged by clubs to perform these types of “entertainment activities”, such as a DJ, musician, band, or sportsperson will for the Act’s purposes be deemed employees and therefore clubs could be required to provide them with superannuation payments depending on how they are engaged.

Clubs need to also keep in mind that section 12(8)(b) of the Super Act, states those who provide services in connection with an entertainment activity will also be deemed as employees, such as lighting and sound technicians.

Clubs are also advised that the ATO has stated that such things as having an ABN, being a hobbyist and being engaged on a one-off basis has no impact.

Where a club contracts someone directly/as a sole trader to undertake the above entertainment activities, they will be liable to pay super. Where there are multiple people performing, such as members of a band, but a club just communicates with and is invoiced by one person who will pay the other members, the club can just pay super to the person who invoices them and that they are dealing with. It is important however to ensure all documentation and payments are in that person’s name. If a band wants super paid separately to each individual however, then a club needs to be provided with individual invoices and super fund details from each individual member.

Where a club contracts an entertainer to perform these activities via a company, partnership or trust however, it will be that body who is responsible for paying superannuation to the individuals involved in the performance, not the club. Where they are engaged via an agent, it is common that the entertainer’s agent will take responsibility for paying their superannuation as well as the applicable fee, but this must be checked and clarified rather than assumed as it is not always the case.

When engaging someone who would come under this definition, it is also important to be aware that super will only be payable on the labour component of work and therefore, super would not be payable on things like equipment hire and costs. Accordingly, these types of costs need to be separated on an invoice from things like a performance or playing fee.

To further assist members, Club Australia engaged PKF, an auditing and accounting expert, to provide a detailed explanation of these rules and this can be found on Club SA Members Only Site on the Policies & Fact Sheet page. Members can also find a general superannuation fact sheet here as well.

Lastly clubs can also view the ATO’s page on super for entertainers here and those who have further questions can also reach out to an accountant or other tax and super expert.