Agencies have obligations to the Australian Taxation Office when paying remuneration to part-time members of Boards, Commissions, Tribunals and similar bodies.

PAYE Obligations

Section 221C(1A) of the Income Tax Assessment Act 1936 provides for taxation instalments to be deducted when employees are paid and these monies are to be remitted to the Australian Taxation Office, subject to any of the qualifications outlined hereunder.

Section 221A(1) of the Act defines an employee as 'a person who receives, or is entitled to receive, salary or wages'.

Section 221A(1) of the Act defines salary or wages, inter alia, as 'salary, wages or allowances... paid to an eligible person as such... and includes payments made under a contract wholly or principally for the labour of the person being paid... but does not include:- ...

p) payment of exempt income;

q) prescribed payments within the meaning of Division 3A; or

r) living-away-from-home allowance benefits within the meaning of the Fringe Benefits Tax Assessment Act 1986.'

The Australian Taxation Office has also determined (under S.221D of the Act) that to the extent the part-time member of a relevant body is required to pay remuneration received from an agency to the part-time member's employer or partnership, it is not appropriate to require PAYE deductions from remuneration paid to the part-time member (Income Tax rulings 2014 and 2321).

Superannuation Guarantee

Departments are also reminded of their obligations under the Commonwealth Superannuation Guarantee (Administration) Act 1992 ('Charge Act'), which commenced on 1 July 1992. The Charge Act imposes a tax on employers who do not make payments of specified amounts to complying superannuation funds for the benefit of their employees.

The people who are 'employees' for Superannuation Guarantee purposes are similar to those covered by the PAYE provision of the Income Tax Assessment Act 1936, in particular people engaged under a contract wholly and principally for labour are employees.

Boards, Commissions, Tribunals and similar bodies, as 'employers' of part-time members, may pay part-time members superannuation contributions at the prescribed rates to a complying superannuation fund nominated by the part-time member.

It should be noted that a part-time member is an employee even if that member:

• directs the remuneration elsewhere (eg. to a partnership or company); or
• is obliged to account for the remuneration earned to other parties (eg. government department).

(Draft Superannuation Guarantee Determination 93/D1 refers.)

Superannuation Guarantee Exemptions

Employers do not have to make Superannuation Guarantee contributions for part-time members who are:

• 65 years or older.

(This exemption is in line with current Commonwealth Superannuation Standards which do not provide for persons 65 years or older to be contributors to superannuation funds. )

• paid less than $450 in a month.

(Under this criteria all part-time chairpersons and part-time members of advisory committees that meet only each month would be exempt.)

General

Agencies seeking more detailed information about their PAYE or Superannuation Guarantee obligations should either seek advice from the Australian Taxation Office or obtain independent professional advice. In addition, the Superannuation Guarantee hot line will be able to answer any further queries, (Phone 131020).

It would be appreciated if you would bring this circular to the notice of sub-departments and other authorities coming within or associated with your administration.

R. G. Humphry,
Director General.