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This video contains synthetic content
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which has been approved by Rick Kimbley
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and RSM Australia. With that out of the
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way, welcome to our global employer
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services update for the month of March
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2025. In this video, we will cover
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updates on superanuation, payroll tax,
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fringe benefits tax, and pushes to
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select changes to industrial awards.
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The case commissioner of taxation v.
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Hatfield plumbing highlights the
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complexities in distinguishing between
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employees and independent contractors
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particularly in the context of
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superanuation obligations. This case
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revolves around whether Mr. Hargreaves
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was an employee under section 123 of the
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superanuation guarantee administration
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act 1992. Mr. Hargreaves complained to
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the ATO that Hatfield had not made
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superanuation contributions on his
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behalf. The ATO determined that Mr.
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Hargreaves was an employee under section
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123 of the act and assessed a
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superanuation guarantee charge of
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$123,521.77. Hatfield submitted an
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objection to the ITO that was denied
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following which it applied to the
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tribunal for a review. The tribunal
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concluded that Mr. Har Greavves was
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engaged to produce a result, not simply
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to provide labor and thus was not an
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employee under section 12 3. The
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commissioner then appealed the finding
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of the tribunal. The appeal focused on
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whether the tribunal improperly
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conflated the common law test for
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employee with the statutory test under
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section 123. The tribunal found that Mr.
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Hargreaves worked under a verbal
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agreement, used his own tools and
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vehicle, and was paid on a do and charge
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basis where he had the freedom to accept
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or reject jobs, set his hourly rate, and
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worked independently without
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supervision. The federal court upheld
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the tribunal's decision, agreeing that
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the tribunal correctly applied the law
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and the appeal was dismissed with the
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tribunal's decision that Mr. Hargreaves
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was not an employee was upheld.
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Payday Super is a major change to the
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way superanuation guarantee payments are
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processed for employers. This long-
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aaited draft legislation provides some
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answers and also leaves some questions.
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Currently, employers are required to
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make superanuation guarantee SG
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contributions for their employees on a
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quarterly basis. However, the federal
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treasury has released draft legislation
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broadly scheduled to commence on the 1st
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of July 2026 which will rewrite the
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superanuation guarantee framework. The
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core of payday super is a move to more
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frequent contributions. Under the
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proposed law, employers will generally
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be required to make superanuation
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contributions to their employees funds
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within seven calendar days from when
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salary or wages are paid. This shift to
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more frequent payments has several
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potential benefits for employees. It
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means superanuation contributions will
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be received earlier, allowing for more
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compounding returns. For employers,
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while it requires more frequent
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processing, it can lead to smoother
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payroll management and prevent the
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buildup of large superanuation
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liabilities. Under the new framework,
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the calculation of superanuation
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obligations will be based on qualifying
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earnings, which will generally align
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with the current ordinary times earnings
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OT base. The maximum contributions base
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will also change, moving from a
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quarterly to an annual application based
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on the concessional contributions cap.
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It's crucial for employees to meet their
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obligations to avoid liability for the
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SGC. These primary obligations include
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paying the required contributions on
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time, which is within seven calendar
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days after the payment of qualifying
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earnings. There are some exceptions to
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this 7-day rule, such as for new
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employees who generally have an
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additional 14 days, contributions to
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stapled funds that are initially
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rejected, allowing up to 42 days, and
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outofcycle earnings like bonuses or
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commissions. If an employer fails to
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make timely contributions and incurs an
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SG shortfall, the calculation of this
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shortfall will be revamped. It will
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include an individual final SG
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shortfall, an individual notional
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earnings component similar to the
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current nominal interest, an
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administrative uplift amount, and any
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applicable choice loadings. Importantly,
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the commissioner of taxation will be
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able to assess an SG shortfall
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unilaterally using data from sources
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like single touch payroll and
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superanuation fund reporting. To
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encourage compliance, the draft law
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introduces an innovative remission
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regime for the administrative uplift
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amount. This uplift, initially set at
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60% of the shortfall and notional
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earnings, can be significantly reduced
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based on factors like whether the
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commissioner has previously made a
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unilateral SGC assessment and crucially
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whether and when the employer lodges a
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voluntary disclosure statement. For
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instance, a voluntary disclosure within
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30 days of the QE day coupled with no
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prior commissioner initiated assessments
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in the past 24 months could result in a
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zero administrative uplift. This
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strongly incentivizes proactive
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governance and the prompt correction of
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errors. In terms of tax deductibility,
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the new framework brings good news. Both
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on-time and late superanuation
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contributions as well as the SGC itself
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will be taxdeductible. However, any
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general interest charge or late payment
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penalties related to the SGC will not be
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taxdeductible. Payday super represents a
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fundamental shift in how superanuation
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contributions are managed. While the
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draft laws don't explicitly address the
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impact of public holiday periods on the
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7-day requirement, the commissioner does
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have discretion to authorize extensions
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in exceptional circumstances. The
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commencement of payday super offers
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employers an incentive to start with a
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clean compliance slate. Therefore, it's
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vital for organizations to begin
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planning now to implement robust
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processes and controls to meet these new
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requirements, reviewing their onboarding
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system configurations and remittance
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frameworks. The commissioner has
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released a decision impact statement to
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provide the ATO's interim response to
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the federal court's decision in the case
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of Touumba regional council v.
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Commissioner of Taxation. The case
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concerns whether a shopping center car
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park qualifies as a commercial parking
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station under the Fringe Benefits Tax
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Act. Justice Logan examined the meaning
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of the word commercial within the
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context of the FBT act and concluded
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that commercial implies an intention to
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make a profit, but that the two Womba
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Grand Central Shopping Center car parks
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primary purpose was to complement the
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shopping cent's operations rather than
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to generate profit independently. The
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interim decision impact statement
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outlines the ATO's position following
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the federal court's ruling that the
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Grand Central Shopping Center car park
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is not a commercial parking station. The
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ATO has appealed the decision and will
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continue to follow its existing
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guidelines until the appeal is resolved.
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The ATO has stated taxpayers should
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continue to lodge their FBT returns
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based on the current ATO view.
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The Victorian Chief Commissioner has
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released revenue ruling
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PTA042 to clarify the meaning of a
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regional employee and employer. For
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context, Victorian regional employers
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may be eligible for a reduced payroll
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tax rate if at least 85% of their total
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taxable wages are paid to regional
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employees. This 85% threshold applies
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both monthly and annually, though
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meeting the annual threshold negates the
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monthly requirement. A regional employee
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is someone who performs services for the
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employer mainly more than 50% of the
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time in regional Victoria. For remote
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work, the employees home location
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determines if they are regional.
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Employers need to keep records to prove
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their regional status. The ruling
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provides examples to illustrate these
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definitions. Last year in September, the
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New South Wales Supreme Court handed
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down its decision in the matter of Uber
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Australia verse Chief Commissioner of
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State Revenue. It found that Uber was
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not liable to pay payroll tax on
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payments made to drivers using its
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platform. In brief, the court found that
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drivers supplied services to Uber,
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resulting in a relevant contract as
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defined in the Payroll Tax Act.
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Specifically, the three activities of
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driving, rating, and referring either on
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their own or in combination, were
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concluded to be services, and those
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services were viewed as being for or in
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relation to the performance of work. The
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court accordingly considered the
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application of the relevant contract
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exemptions with the majority of these
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exemptions being rejected both from a
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technical perspective and due to lack of
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evidence. The court then considered
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whether the payments made by Uber were
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for or in relation to the performance of
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work. Although a relevant contract was
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found to exist between the driver and
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Uber, Uber was not making any payments
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to the driver. Instead, it was actually
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the rider who made payments to the
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drivers. and Uber's role in the
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arrangement was in a capacity as a
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limited payment collection agent. On
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this basis and having regard to the
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contractual terms and the purpose of the
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contractor provisions, the court
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concluded that payments were not for or
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in relation to the performance of work.
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This resulted in an $81 million payroll
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tax reduction. The commissioner appealed
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this judgment and several weeks ago the
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appeal was heard. Uber argued the
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intention of the payroll tax provisions
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was to level the playing field between
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those paying and those seeking to avoid
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the tax, not to impose payroll tax on
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service contracts that bear no
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resemblance to a traditional employer
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employee relationship. To that end, Uber
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argued it was a mere lead generator
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connecting drivers with riders and a
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collection agent for the money paid by
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rider to driver. In written submissions,
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the commissioner of state revenue argued
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that payments from Uber to drivers were
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deemed wages for the purposes of the
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payroll tax act. If the driver did not
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drive a rider, there would be no money
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which Uber had to pay to the driver.
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Accordingly, there is a direct or
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indirect relationship between the
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payments to drivers and the work of
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driving. The commissioner cited Thomas
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and Nars, the case that extended payroll
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tax to doctors working in medical
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centers, to argue that provided payments
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are workrelated, they are liable for
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payroll tax. The judges expressed
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skepticism about Uber's argument,
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suggesting that the company's operations
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are more structured and integral to the
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business than merely generating leads.
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The court has reserved its judgment on
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the appeal. The outcome of this case
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could have far-reaching consequences for
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the gig economy, potentially leading to
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significant payroll tax liabilities for
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companies operating under similar
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business models. The decision will be
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closely watched by various industries
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and could prompt legislative changes to
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address the evolving nature of work in
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the gig economy.
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Employers represented by the Australian
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Industry Group, AI Group, and Business
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New South Wales are pushing for changes
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to the Clarkson Banking Awards. The
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Australian Industry Group proposes a
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125% exemption rate, meaning workers
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earning 25% more than their award rate
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would not be entitled to penalty rates
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over time and other award conditions.
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Business New South Wales proposes a 155%
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exemption rate for mid-level managers
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earning $85,000 or above, allowing
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overtime after 50 hours a week.
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Employers argue that current award
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requirements are outdated and do not
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reflect the flexible nature of modern
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work arrangements. Unions strongly
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oppose the proposals, arguing they
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undermine worker rights and protections.
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Finance sector union and Australian
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services union leaders criticized the
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proposals as attacks on workers pay and
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fundamental rights. Recording hours for
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salaried workers has been a
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long-standing issue, exacerbated by the
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increase in work from home. The case is
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set for directions in September,
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indicating ongoing discussions and
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potential changes in industrial
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relations regarding working from home
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and penalty
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rates. Thank you for joining our update
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for the month of March 2025.
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We can see a lot of update for fringe
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benefits tax for the 2025 financial
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year. We recommend employers checking
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the new updates on the legislation on
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the upcoming fringe benefits tax
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lodgement. As always, please feel free
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to connect with your local RSM contact
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being myself and Peter in Melbourne,
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Gina and Neve in Perth, and Jason in
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Sydney.