The superannuation guarantee (SG) rules cast a wide net, often extending beyond the traditional definition of a common law employee. This means that some company directors, contractors, entertainers, sportspersons, and other workers may also be entitled to SG contributions.

Under the SG legislation, employers are required to pay superannuation for anyone classified as an employee—according to the broader SG definition, not just common law. This has recently led to increased scrutiny around industries like live entertainment and fitness, where workers such as performers and gym instructors are not always clearly classified.

Uncertainty? Get Clarity Early

If there is any doubt about whether your workers are entitled to SG, it is essential to get clarity. This could involve:

• An internal review of your arrangements,

   

• Professional advice from us,

   

• A legal opinion from an employment lawyer, or

   

• A private ruling request to the ATO based on your specific workplace setup.

   

A common concern for business owners is the ATO’s ability to retrospectively recover unpaid SG. There is no statutory time limit restricting how far back the ATO can go—meaning unpaid contributions could be recovered from years past. 

The system is designed to ensure that every eligible worker receives their rightful retirement contributions, and the complementary Director Penalty Regime reinforces this responsibility at the highest level of an organisation.

Who Is Exempt from SG?

You do not need to pay superannuation guarantee contributions for:

• Employees under 18 years old who work 30 hours or less per week;

   

• Private or domestic workers (e.g. nannies, housekeepers) who work 30 hours or less per week;

   

• Non-resident employees performing work outside Australia;

   

• Employees temporarily working in Australia under certain international agreements;

   

• Specific foreign executives on particular visas or permits.

   

Additionally, SG generally doesn’t apply to arrangements with companies, trusts, or partnerships—unless the working relationship otherwise falls under SG’s extended employee definition.

Australian Employees Working Overseas

If you have Australian employees temporarily working in a country with a bilateral social security agreement (like the United States), you should continue making SG contributions. You can apply for a certificate of coverage to avoid having to pay super (or its equivalent) in the host country during the temporary assignment.

The Super Guarantee’s Broader Definition of an Employee

Under section 12 of the Superannuation Guarantee (SG) legislation, the definition of an “employee” extends well beyond the common law understanding. This expanded scope means that SG obligations can apply in situations many employers may not expect.

The SG rules specifically include the following individuals as employees for SG purposes:

• Company directors who are remunerated for carrying out their duties;

   

• Contractors engaged under a contract that is wholly or mainly for their labour;

   

• Certain state and Commonwealth government contractors; and

   

• Individuals paid to perform or present in any music, play, dance, entertainment, sport, or similar promotional activity. This also applies to those providing services connected to these activities or involved in film, television, tape, or disc productions.

   

The ATO has also published common mistakes businesses make when distinguishing between employees and independent contractors—highlighting how easily businesses can misclassify working arrangements.

Are Contractors Entitled to SG?

Holding an Australian Business Number (ABN) alone does not exempt a contractor from SG. If the agreement looks like one for the provision of an individual’s labour and skills, the contractor may fall within the SG definition of an employee.

If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.

This can be confronting for employers, particularly when contractor fees already include an uplift to cover SG and other entitlements. However, the actual content of the contract does not override SG obligations. If the nature of the arrangement meets the SG definition of employment, super must be paid, regardless of what the contract states.

Super Guarantee and Contractors: What the ATO Says

The Australian Taxation Office (ATO) provides specific guidance on when contractors must be paid superannuation guarantee (SG). Even if a contractor has an ABN, SG may still apply if:

• You engage them under a written or verbal agreement that is mainly for their labour (i.e. more than half the contract value is for their personal effort and time),

   

• You pay them for their skills and labour, rather than to achieve a specific result, and

   

• They are required to personally complete the work—they cannot delegate the task to someone else.

   

In a recent ruling, the ATO clarified that if a worker must use a substantial capital asset—like a truck—it may support the argument that the contract is not primarily for their labour. However, each case depends on the specific facts of the arrangement.

Are Directors Entitled to SG?

Yes. Company directors—whether executive or non-executive—must be paid SG if they are remunerated for carrying out their duties.

 

SG Obligations for Entertainers, Performers & Sports Professionals

If an individual artist, performer or sportsperson is paid directly to present or participate in an activity involving performance or physical/artistic skill, they are considered employees for SG purposes under section 12(8) of the SG legislation. This includes:

• Performing or presenting in music, plays, dance, entertainment, or sport,

   

• Providing services in connection with any of the above activities, or

   

• Participating in the production of film, TV, radio broadcasts, discs or tapes.

   

However, if the performer operates through a company, trust, or partnership, and the contract is with that entity—not the individual—then SG may not be payable, as there is no employment relationship with the individual.

Who Pays the SG? Understanding Responsibility

The party that pays the individual for their work is generally responsible for their SG:

• If a music festival engages a sole trader performer directly, the festival is likely responsible for SG.

   

• If that performer hires other musicians or crew, they may be responsible for SG payments to them.

   

• If the festival uses an agency to supply performers and pays the agency (which then pays the performers), the agency would likely bear SG obligations.

   

• If the agency only provides a booking service, and the festival pays the performers directly, the SG liability likely remains with the festival.

   

This highlights how vital it is to correctly identify who is considered an employee and who holds responsibility for SG.

What Does “In Connection With” Mean?

The SG rules also apply to those working in connection with performers—such as producers, videographers, editors, and other support roles. If these individuals meet the SG definition of an employee, the payer must make SG contributions on their behalf.

Are Gym or Fitness Instructors Considered Sportspeople?

Possibly. Whether a gym instructor falls within the SG employee definition depends on the specific facts of their engagement. For example, if the instructor:

• Operates as a sole trader with an ABN,

   

• Has a contract with the gym stating they are an independent contractor,

   

• Is paid per class or session based on their time and labour,

   

• Uses the gym’s equipment, systems, and wears its uniform, and

   

• Is trained by the gym in how to deliver its services,

   

Then the ATO may view them as working to build the gym’s business—not their own—and classify them as a deemed employee. In this case, the gym could be liable for back payment of SG from the start of the working relationship.