Olias Pty Ltd as trustee for the Storer Family Trust and Commissioner of Taxation (Taxation)

[2021] AATA 1524

Olias Pty Ltd as trustee for the Storer Family Trust and Commissioner of Taxation (Taxation) [2021] AATA 1524 (28 May 2021)

Division:SMALL BUSINESS TAXATION DIVISION

File Numbers:2019/5734, 2019/5735, 2019/5736         

Re:Olias Pty Ltd as trustee for the Storer Family Trust  

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Member D Mitchell

Date:28 May 2021

Place:Adelaide

The Tribunal decides that the objection decision:

(a)as it relates to the Superannuation Guarantee Assessment for the quarter ended    31 March 2016 is varied in accordance paragraphs 147 and 148 of the reasons for decision; and

(b)is otherwise affirmed.

……………[SGD]…………………………............

Member D Mitchell

CATCHWORDS

TAXATION – superannuation guarantee charge – whether worker is an employee or independent contractor – multi-factorial approach to characterisation – objection decision under review is varied for one quarter in accordance with the agreement of the parties – the objection decision is otherwise affirmed.

LEGISLATION

A New Tax System (Australian Business Number) Act 1999 (Cth)

Superannuation Guarantee (Administration) Act 1992 (Cth)

Taxation Administration Act 1953 (Cth)

CASES

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122

Dental Corporation Pty Ltd v Moffet [2021] HCATrans 16
Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118
Hollis v Vabu Pty Ltd [2001] HCA 44
Marshall v Whittaker’s Building Supply Co Ltd [1963] HCA 26; (1963) 109 CLR 210
MWWD and Commissioner of Taxation [2020] AATA 4169
On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3) [2011] FCA 366; (2011) 214 FCR 82

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16

REASONS FOR DECISION

Member D Mitchell

28 May 2021

INTRODUCTION

1. Olias Pty Ltd as trustee for the Storer Family Trust (the Applicant) is seeking review of an objection decision of the Commissioner of Taxation (the Respondent) dated 11 July 2019.[1]

   [1]    Exhibit 1, Joint Hearing Book, T Documents, T2, page 16, Notice of Objection Decision.

2. The reviewable decision disallowed the Applicant’s objection to Superannuation Guarantee Charge assessments made by the Respondent for the quarters ended 31 December 2014 to 30 June 2017 (Relevant Period).[2]

   [2]     Exhibit 1, Joint Hearing Book, T Documents, T2, pages 16-25, Notice of Objection Decision and Reasons            for Decision.

   BACKGROUND

3. During the Relevant Period the Applicant carried on business as a music school as a franchisee of the Forte School of Music.[3] The directors of the Applicant during the Relevant Period were Mrs Irene Storer (Mrs Storer) and Mr Stuart Storer (Mr Storer).[4] The Applicant traded as “Forte School of Music” from premises at Morphett Vale and Black Forest in South Australia.[5]

   [3]     Exhibit 1, Joint Hearing Book, T Documents, T3, page 27, Superannuation Guarantee – Status of the Worker       Questionnaire – Principal/Payer.

   [4]     Exhibit 1, Joint Hearing Book, Supplementary T Documents, ST1, page 134, Olias Pty Ltd – Historical      Company Search.

   [5]     Exhibit 1, Joint Hearing Book, T Documents, T3, page 27, Superannuation Guarantee – Status of the Worker       Questionnaire – Principal/Payer.

4. The core operations of the Applicant is teaching music (principally piano and keyboards) to children from the age of 12 months via a set curriculum devised by specialist music educators.[6]

   [6]     Exhibit 1, Joint Hearing Book, Applicant’s Revised Statement of Facts, Issues and Contentions, page 161,           paragraph 1.

5. In addition to the set curriculum program, the Applicant also offers private tuition for students from 8 years of age for piano, singing, guitar, flute, violin, clarinet, drums and saxophone.[7] During the Relevant Period private lessons were provided on a term basis[8] and weekly time slots were reserved exclusively for individual students.[9]

   [7]     Exhibit 1, Joint Hearing Book, T Documents, T29, page 107, Website Extracts.

   [8]     Exhibit 1, Joint Hearing Book, Supplementary T Documents, ST2, page 136, Terms and Conditions – Forte          School of Music.

   [9]     Exhibit 1, Joint Hearing Book, Supplementary T Documents, ST2, page 136, Terms and Conditions – Forte          School of Music.

6. During the period 1 July 2014 to 30 September 2017, the Applicant engaged the services of Mr Jayden Rowell (Mr Rowell) to provide private lessons for guitar and singing to students.[10] The Applicant’s position is that it engaged Mr Rowell as an independent contractor not as an employee.

   [10]    Exhibit 1, Joint Hearing Book, T Documents, T3, pages 26-42, Superannuation Guarantee – Status of the            Worker Questionnaire – Principal/Payer and T4, pages 43-58, Superannuation Guarantee – Status of the    Worker Questionnaire – Worker/Payee.

7. The Respondent undertook an audit of the Applicant’s superannuation guarantee obligations in relation to Mr Rowell and on 10 July 2018 issued a notice of position and position paper.[11] The Respondent having considered the information provided to it in the Superannuation Guarantee Status of the worker questionnaires completed on behalf of the Applicant[12] and Mr Rowell,[13] formed the position that the relationship between the Applicant and Mr Rowell was one of employer and employee under superannuation law.[14]

   [11]    Exhibit 1, Joint Hearing Book, T Documents, T5, pages 59-68, Notice of Position and Audit Position Paper.

   [12]    Exhibit 1, Joint Hearing Book, T Documents, T3, pages 26-42, Superannuation Guarantee – Status of the            Worker Questionnaire – Principal/Payer.

   [13]    Exhibit 1, Joint Hearing Book, T Documents, T4, pages 43-58, Superannuation Guarantee – Status of the            Worker Questionnaire – Worker/Payee.

   [14]    Exhibit 1, Joint Hearing Book, T Documents, T5, pages 59-68, Notice of Position and Audit Position Paper.

8. According to the Applicant’s completed Superannuation Guarantee – Status of the Worker Questionnaire – Principal/Payer form:[15]

   [15]    Exhibit 1, Joint Hearing Book, T Documents, T3, pages 26-42, Superannuation Guarantee – Status of the            Worker Questionnaire – Principal/Payer.

   ·Mr Rowell commenced on 1 July 2014 and ceased on 30 September 2017.

   ·Mr Rowell taught private instrumental lessons – guitar.

   ·Lessons were scheduled on a school term by school term basis. Mr Rowell was expected to arrive at the premises, bring his own guitar and teaching materials, instruct booked students and submit a weekly report detailing students taught.

   ·Mr Rowell was referred to the Applicant by his girlfriend who was an existing teacher at the Forte School of Music.

   ·No written agreement was entered into with Mr Rowell. There was a verbal agreement for him to commence (initially on a temporary basis) to teach an existing group of students due to the departure of another teacher. A probation period of 1 term applied and after that they both decided he would carry on teaching those students and he was taking on new students as well.

   ·Mr Rowell was not able to renegotiate his rate of pay or terms and conditions. Existing students already had pricing for lessons and so the rates had already been determined.

   ·The Applicant did not have the right to dismiss or terminate the services of Mr Rowell. He had an ongoing arrangement to teach these students. Their ability to dismiss him would have required him to break the law or fail a police check/working with children clearance (or a change to those clearances).

   ·There were 6 other workers engaged on the same or a similar basis as Mr Rowell. There are two separate teaching streams offered by Forte School of Music:

   (1)Group lessons. These teach the specific Forte Music programs using Forte syllabus and the teachers are employees. Everything they need is supplied and they wear uniforms.

   (2)Instrument lessons. These are taught 1 on 1 and the teacher can choose the syllabus and brings their own instruments. These teachers are contractors.

   ·The Applicant did not provide Mr Rowell with any training. He never attended any training run by the Forte School of Music.

   ·Other than there being a minimum number of students Mr Rowell took over, he was able to choose his own days to work, number of hours and therefore number of students he wanted to teach. Times/days were negotiated with parents.

   ·The Applicant did not require Mr Rowell to attend meetings within its schools or with its clients.

   ·Mr Rowell was not entitled to paid leave. There were no set working hours as he determined his own schedule.

   ·The Applicant did not schedule the jobs/tasks to be carried out by Mr Rowell.

   ·The Applicant directed where Mr Rowell performed the jobs/tasks. It was a requirement that the teaching was done at the Applicant’s premises.

   ·Mr Rowell was not supervised. He did his own thing and conducted his lessons as he saw fit. Quality control was done by the parents, which the Applicant could determine by parent complaints.

   ·Mr Rowell could refuse to do a particular job or task. They encouraged the use of a particular publication of teaching books which they believe prove to be successful, however, he was able to (and did) refuse to use them and taught with his own method and resources.

   ·If Mr Rowell wanted to take time off he was required to seek the Applicant’s permission and to provide prior notice. Planned holidays were expected to be held outside of teaching terms. Where sick or suddenly unavailable for teaching the Applicant was required to be notified and if possible a replacement could be called in. Alternatively, Mr Rowell could reschedule the lesson with the parents.

   ·Mr Rowell could provide his services to other individuals or businesses. Mr Rowell was working elsewhere concurrently while teaching at Forte School of Music. There was no restrictions on him teaching elsewhere. He took all of his students when he ceased contracting at Forte School of Music.

   ·Mr Rowell worked alone and the instrumental lessons are held 1 on 1.

   ·Mr Rowell did not train, supervise or assess the work or of other employees/workers of the Applicant.

   ·Mr Rowell was required to wear a shirt uniform when teaching at the Applicant’s premises.

   ·Mr Rowell did not have his own name badge, clothing, business cards, stationary or any other items promoting his business/services.

   ·Mr Rowell did not advertise his business on any of the assets/equipment he used.

   ·Mr Rowell did not submit quotes, invoices or any other types of documents to the Applicant. There was a roll of how many students were taught during the week. This was how payment was determined with reference to a fixed rate per lesson.

   ·The Applicant set the rate of pay.

   ·Mr Rowell’s rate of pay was changed. Initially the rate was determined by taking over the role of a previous contractor. Rates change with the experience the worker has in teaching. He had no formal qualification other than a year 12 music certificate. It was noted, market price for music lessons prevents much variation in rates.

   ·Mr Rowell’s payment was dependent on the completion of the task/job. Students could be away for a lesson and as they pay per term he would still be paid. It was up to him and the student to negotiate the day/time/agreement over the student’s catch up lesson.

   ·The Applicant did not do any checks to confirm that Mr Rowell had completed his work before he was paid.

   ·Mr Rowell did not receive payment or reimbursement for anything other than the work he completed.

   ·The Applicant did not deduct income tax, superannuation or any other amounts from payments made to Mr Rowell.

   ·The Applicant gave specific instructions about whether Mr Rowell was to complete his work personally. There was a verbal understanding that Mr Rowell was to provide the lessons. This was also the understanding between Mr Rowell, the student and the student’s parents.

   ·If Mr Rowell was absent either he arranged for someone else to do his work or it was not done while he was away. Depending on the circumstances, a missed lesson or a lesson was cut short, then Mr Rowell would be required to arrange make up lessons at an alternative time and  part term absences that was planned in advance, another teacher may assist.

   ·Mr Rowell could organise his work or tasks to be completed by another employee or existing contractor of the Applicant, but not to another person (with or without the Applicant’s approval).

   ·Mr Rowell was responsible for workers compensation insurance and public liability insurance was the responsibility of the Applicant.

   ·No claims were made against insurance.

   ·Mr Rowell was not required to guarantee his work for any period of time.

   ·If Mr Rowell made a mistake or broke something when doing his work, he would have to correct the work in his own time. If something happened that prevented a full lesson from taking place he would be required to organise a catch up lesson. If his instrument broke, he would be responsible for the repair.

   ·The Applicant did not provide to or reimburse Mr Rowell for any assets, equipment or tools to complete his work.

   ·Mr Rowell had full autonomy with regards to the teaching material and methods used. He had 100% decision making power.

   ·The Applicant provided Mr Rowell with a room in which to conduct private lessons as he saw fit and he negotiated lesson times with parents. For convenience the Applicant invoiced parents for lessons on a term by term basis with agreed payment to Mr Rowell. Mr Rowell was responsible for teaching and ultimately the ongoing service to these students.

   ·The benefits provided by the Applicant are a central location for instrumental teachers. Parents are able to access a number of different instrumentalists in one location which can assist in scheduling multiple children and lessons.

9. According to Mr Rowell’s completed Superannuation Guarantee – Status of the Worker Questionnaire – Worker/Payee form:[16]

   [16]    Exhibit 1, Joint Hearing Book, T Documents, T4, pages 43-58, Superannuation Guarantee – Status of the            Worker Questionnaire – Worker/Payee.

   ·He secured work with the Applicant by word of mouth.

   ·He did not have a written agreement with the Applicant. As he understood the conditions of his engagement, he would arrive at the location of the business at the time asked and teach the students they told him to. He was required to give notice if he was unable to attend a day of teaching.

   ·He was not able to renegotiate his rate of pay.

   ·He was not sure if the Applicant had the right to dismiss or terminate his services.

   ·He did not complete any training with the Applicant.

   ·Work was generally assigned in half-hour segments with one student normally per one half-hour segment. He would work through each of the segments, and they would normally be placed one after the other, usually resulting in a few hours of continuous work. However, when students were unable to be placed immediately following one another, he would not be paid for the time in between the segments. Work was generally carried out on a per week basis, so he would generally consistently work the same days of the week.

   ·He was not required to attend meetings within the Applicant’s business or with their clients.

   ·He was not entitled to paid breaks.

   ·The Applicant scheduled the jobs/tasks he had to carry out. He was asked to teach the students of the Applicant and was asked to teach them either guitar or signing, which was at the discretion of the student and the Applicant.

   ·He was directed that all activities would take place on the Applicant’s business premises. He would be instructed to carry out any and all activities in an assigned room which would normally remain consistent on a weekly basis.

   ·He was not supervised. To the best of his knowledge, quality control was undertaken through the satisfaction of the customers/students. If there were any issues with his performance, it was generally assumed that the customer/student would make this known to the Applicant.

   ·He could refuse to do a particular job or task.

   ·If he wanted time off he was required to get the Applicant’s permission and to provide notice. If an employee was unable to make a shift given to them then they would be required to let the business know as much in advance as possible. Occasionally the employee would be required to make up the time they missed, and teach the students on an alternative occasion and other times a substitute teacher (also an employee of the Applicant) would be assigned to teach on the day.

   ·During the period he worked for the Applicant he did not advertise his services.

   ·He could not provide his services to other individuals or businesses independently of the Applicant during that time.

   ·He did not work alone.

   ·He did not train, supervise or assess the work of the Applicant’s other employees/workers.

   ·He was required to wear a polo shirt with the Applicant’s business logo on the chest.  These were lent to him for the duration of his employment and he was required to return them upon his cessation.

   ·Neither the Applicant nor he advertised on his equipment.

   ·He did not submit quotes, invoices or any other type of documents to the Applicant. On a fortnightly basis, employees would complete a timesheet like form that detailed the students taught by them within that period.

   ·His rate of pay was set by the Applicant.

   ·His rate of pay changed. Approximately once every year of employment he would receive a raise. However, the amount of the raise as well as his actual rate of pay was never disclosed fully to him. He was only given estimates after constant requests of the actual rates. To the best of his knowledge, the raise was approximately 25 cents per half hour student and a rough approximation of that percentage for students with longer or shorter lessons.

   ·His payment was dependent on the completion of the task/job. This would vary each time. If a student did not arrive at the time designated for their lesson (with or without notice) he was normally asked to instead give the lesson at an alternative time, and was not paid for the time that the student missed. Occasionally, if no alternative time could be arranged, he would be either paid for the missed time, or not, this was normally dependent on whether the Applicant had been paid for the service or not. However, there was no consistency in these situations.

   ·He was never paid or reimbursed for anything other than the work he completed.

   ·He was told verbally that he was to complete the teaching himself.

   ·If he was sick or went on holidays the Applicant would arrange for his work to be done while he was away. This would vary on any given incident, however generally if he was unable to attend a day of work, he would notify the Applicant and the work would either be assigned to another employee at the discretion of the Applicant, or if no substitute could be arranged would be completed by him at an alternative time arranged by the Applicant, himself and the student.

   ·He was not able to organise for his work or tasks to be completed by an employee of the Applicant or another person engaged by him (with or without the consent of the Applicant). He was unsure as to the exact details of these situations, as no information on the actual policies of the Applicant was ever made known to him.

   ·The Applicant was responsible for workers compensation, private accident, public liability and any other type of insurance. He was never provided with any formal proof of such insurance, however, was told informally by the Applicant that it had paid for all such things.

   ·He was not required to guarantee his work.

   ·If he made a mistake or broke something he was not required to correct the work in his own time, pay for the materials used to correct the mistake or pay for the breakage.

   ·He did not supply his own assets, equipment or tools and he was not reimbursed for the same as it was not applicable.

   ·The Applicant supplied the material for the job and arranged delivery of that material. For teaching the Applicant would have provided materials such as instruments to play, books to teach from and music to have the students play along with that he was able to use in order to undertake any tasks. However, if he chose he was able to provide his own alternatives, for example to bring his own guitar and use it to undertake his duties. If he required a specific book for teaching he could request the Applicant to order the book if it was not currently in their possession.

1. The Applicant provided further information in response to the Respondent’s audit position by way of a letter from their accountants dated 20 August 2018.[17]

   [17]    Exhibit 1, Joint Hearing Book, T Documents, T6, pages 69-73, Letter from Hu Partners.

2. On 26 October 2018, after finalising the audit, the Respondent issued notices of assessment of superannuation guarantee charge and calculation sheets for the Relevant Period.[18]

   [18]    Exhibit 1, Joint Hearing Book, T Documents, T7-T28, pages 74-106, Notice of Assessment of     Superannuation Guarantee Charge and Superannuation Guarantee Shortfall and/or Choice Liability Calculation for the Relevant Period.

3. On 16 November 2018, the Applicant lodged an objection to the assessments.[19]

   [19]    Exhibit 1, Joint Hearing Book, T Documents, T31, pages 112-116, Objection Form – for Tax      Professionals and T32, pages 117-122, Letter from Hu Partners.

4. On 11 July 2019, the Respondent disallowed the Applicant’s objection having decided that Mr Rowell was an employee of the Applicant under common law and the extended definition in the Superannuation Guarantee (Administration) Act 1992 (Cth).[20]

   [20]    Exhibit 1, Joint Hearing Book, T Documents, T33, pages 123-132, Objection Decision.

5. The Applicant lodged an application for review of the objection decision with the Tribunal dated 9 September 2019.[21]

   [21]    Exhibit 1, Joint Hearing Book, T Documents, T1, pages 1-15, Application for Review.

6. A Hearing was conducted by Microsoft Teams on 29 and 30 April 2021, both the Applicant and Respondent were represented by Counsel. Mr and Mrs Storer gave evidence on behalf of the Applicant and Mr Rowell was called to give evidence by the Respondent.

   THE LAW

   Superannuation Guarantee

7. Where an employer does not provide the minimum level of superannuation support for its employees (unless the employee is an exempt employee) via payment of the superannuation guarantee into an appropriate fund by the date such a payment is required, the employer is required to pay the superannuation guarantee charge as calculated in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act).

8. Section 12 of the SGA Act, relevantly provides:

   12  Interpretation: employee, employer

   (1)  Subject to this section, in this Act, employee and employer have their ordinary meaning. However, for the purposes of this Act, subsections (2) to (11):

   (a)  expand the meaning of those terms; and

   (b)  make particular provision to avoid doubt as to the status of certain persons.

   …….

   (3)  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.

   ……..

9. Whether or not a worker is an employee or contractor has been an issue that the courts and the Tribunal have wrestled with on many occasions. Legal precents provide that the issue is resolved using a ‘multi-factorial’ approach to characterisation.[22] The common law indicia include, but not limited to the contract (being the terms of engagement), control, integration, delegation, risk and tools and equipment. Given the factual nature of considering the relationship in question the same fact may be applicable across multiple indicia.

   [22]    Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 35-36.

10. In Marshall v Whittaker’s Building Supply Co Ltd [1963] HCA 26; (1963) 109 CLR 210 at 217, Windeyer J explained that:

    …. the distinction between a servant and an independent contactor … is rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own.

11. This distinction was taken up by the High Court in Hollis v VabuPty Ltd [2001] HCA 44 (Vabu), where Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ noted the distinction to be:

    …. Rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own.

12. This view was essentially also adopted by McHugh J in a separate judgement in Vabu where he explained at [68] an independent contractor was:

    …. someone who acts as an independent principal, exercising an independent discretion in carrying out a task for his own business interest and who is retained simply to produce a result.

13. In Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122 (Personnel Contracting) Allsop CJ having considered these precedents provided that the approach to characterisation is one that must involve looking at the relationship as a whole. Allsop CJ provided at [15] that:

    Attention to these expressions of the underlying conceptions involved does not lead one to a simple formula or definition, but rather it illuminates the need for characterisation of a human, social, legal and commercial relationship embodying such relational concepts, to which process the rights and obligations sourced in contact and the practical realities of execution, performance and relationship are relevant. …..

14. His Honour warned against treating the different indica that may be relevant in a particular case as a checklist, he explained (at [20]) that what is required is an:

    …. Intuitive appreciation and assessment of the whole, rather than a process of mechanically disaggregating and deconstructing different parts of the relationship by testsdrawn from other cases.

15. The most recent decision on the operation of section 12(3) of the SGA Act, is that of the Full Federal Court in Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118 (Dental Corporation).  In that case the Court had to determine whether Mr Moffet was an employee or contactor for the purpose of leave entitlements and superannuation guarantee.

16. Perram and Anderson JJ in their joint judgment explained that section 12(3) of the SGA Act requires three questions to be asked and that emphasis is placed on the view of the relationship held by the punitive employer. Their Honours provided at [82]-[84]:

    82In our opinion, what s 12(3) requires is that: (a) there should be a ‘contract’; (b) which is wholly or principally ‘for’ the labour of a person; and (c) that the person must ‘work’ under that contract.  There is no doubt that Dr Moffet provided his work under the Services Agreement so the requirements of (a) and (c) are met.

    83So far as (b) is concerned, the word ‘for’ is purposive but even the simplest employment relationship has two purposes depending on the perspective from which it is viewed.  From the employer’s perspective an employment contract is ‘for’ the provision of labour (in return for wages); from the employee’s perspective it is ‘for’ the receipt of wages (in return for labour).

    84Since s 12(3) poses the question of whether the contract is ‘for’ the labour of a person, this shows that Parliament was mandating an inquiry into the purpose of the contract from the perspective of the person obtaining the benefit of the labour (ie the quasi-employer).  On no view could the question posed by s 12(3) be answered by asking whether the contract was wholly or principally ‘for’ wages.

17. Focus therefore being what was the agreement in place ‘for’ from the punitive employers perspective is to be determined by reference to its terms. The question to be asked is whether the labour component was ‘wholly or principally’ what the agreement was ‘for’ so far as the Applicant was concerned.[23]

    [23]    Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118 at [102].

18. It is noted that special leave to appeal the decision of the Full Federal Court was denied by the High Court of Australia with Gageler J providing that:[24]

    There is no reason to doubt the jurisdiction of the Federal Court, nor are we persuaded that there is reason to doubt the conclusion reached in the Federal Court that the respondent was an employee of the applicant by operation of section 12(3) of the Superannuation Guarantee (administration) Act. ……

    [24]    Dental Corporation Pty Ltd v Moffet [2021] HCATrans 16.

    Onus of Proof

19. Where a taxpayer is dissatisfied with an assessment they may object against it in accordance with the requirements set out in Part IVC of the Taxation Administration Act 1953 (Cth) (TAA 1953).

20. The Respondent must decide whether to allow, wholly or in part; or disallow, the taxpayer’s objection.[25]

    [25] Section 14ZY of the TAA 1953.

21. A taxpayer dissatisfied with the Respondent’s objection decision may apply to the Tribunal for a review of the decision or appeal to the Federal Court against it.[26]

    [26] Section 14ZZ of the TAA 1953.

22. Section 14ZZK(b)(i) of the TAA 1953 provides that on application for review of a reviewable objection decision, the Applicant has the burden of proving that the assessment is excessive or otherwise incorrect and what the assessment should have been.

    ISSUES

23. On application for review of a reviewable objection decision, the Applicant has the burden of proving that the Superannuation Guarantee Charge assessments are excessive or otherwise incorrect and what the assessment should have been.[27] Therefore, to be successful in their application before this Tribunal the Applicant must prove that Mr Rowell was not an employee during the Relevant Period.

    [27] Section 14ZZK(b)(i) of the TAA 1953.

24. As such the issues before the Tribunal are whether during the Relevant Period Mr Rowell was:

    an employee of the Applicant within the ordinary meaning of the word “employee”?

    (b)an employee of the Applicant within the extended definition of “employee” set out in section 12(3) of the SGA Act? Specifically, was Mr Rowell a person who worked under a contract that was wholly or principally for his labour.

    EVIDENCE

    Evidence of Mr Storer

25. In the lead up to the Hearing Mr Storer provided two written statements.[28] At Hearing Mr Storer confirmed that he adopted the statements as being true and correct to the best of his knowledge.[29] Further after dealing with an objection raised by the Respondent at Hearing, paragraphs 64 and 65 of Mr Storer’s Witness Statement found on page 185 of the Joint Hearing Book were stuck out and consequently will not be considered by this Tribunal.[30]

    [28] Exhibit 1, Joint Hearing Book, Witness Statement of Stuart Storer, pages 176-185 and Exhibit 2,   Supplementary Witness Statement of Stuart Storer and attachments.

    [29]    Transcript, page 13.

    [30]    Transcript, page 14.

26. In his initial witness statement, Mr Storer outlined:[31]

    [31]    Exhibit 1, Joint Hearing Book, Witness Statement of Stuart Storer, pages 176-185.

    ·The Applicant in its capacity as trustee of the Trust, owns and operates Forte School of Music franchise businesses at Morphett Vale, South Australia (which was established in 2003) and at Black Forest, South Australia (which was established in 2005).

    ·The core focus of the franchise is, and always has been tuition in piano and keyboards, using the Forte Method which is a unique teaching method and syllabus.

    ·The Applicant’s businesses have always been focussed on the teaching of piano and keyboard in a group learning environment, in accordance with the Forte Method. This is its core function or activity.

    ·The Applicant across both schools currently has a body of over 500 students who it teachers piano/keyboard using the Forte Method.

    ·The Applicant across both schools, including himself and Mrs Storer employees about 18 piano/keyboard teachers using the Forte Method to teach those students.

    ·Piano/keyboard teachers are engaged by the Applicant as employees on a casual basis, paid wages on an hourly rate, set depending on their tenure with the Applicant and are specifically trained in, and required to use the Forte Method as part of their duties.

    ·He and Mrs Storer in addition to wages also receive a distribution of profits from the Trust.

    ·About 6 of the piano/keyboard teachers are employed by the Applicant as full time causals and the rest are part-time casuals.

    ·The Applicant’s businesses mainly operate in the afternoons and evenings, as most of its students are of school age and therefore need to receive their music lessons outside of school hours.

    ·Piano/keyboard teachers are paid set amounts on a per-term basis as they generally work set hours during each term. The students are contracted on a per term basis. A change in the number of students at the start of a new term may affect the teachers working hours for that new term.

    ·The Applicant gradually branched out into teaching some instruments other than piano and keyboard because it began to receive increasing queries typically from parents of existing piano/keyboard students. There were occasions when a existing student or their sibling(s) wished to learn an instrument other than piano/keyboard.

    ·The other instruments the Applicant started to offer to teach (other than piano and keyboards) were voice, guitar, drums and violin.

    ·The teaching of these other instruments has only even been adjunct to, and a peripheral activity of the Applicant’s business because they did not relate to its key activity. They arose only sporadically and randomly in response to particular needs of existing students or their family members.

    ·The Applicant did not seek to develop or otherwise chase as part of the development of its overall business plan the teaching of the other instruments.

    ·He and Mrs Storer are not multi-instrumentalists to the point of being able to confidently teach students in whatever other instrument the student might choose or to the point of confidently developing such alternative skills in the Applicant’s staff.

    ·As the teaching of other instruments was a non-core, adjunct activity of which he and Mrs Storer were unable to have any significant input into, they decided to out-source that aspect of the teaching operations of the Applicant’s business to external contractors.

    ·Not many external contractors were engaged by the Applicant to teach other instruments as it was very much a peripheral activity.

    ·He estimates that over the last 3 years no more than 50 of the Applicant’s students were learning other instruments, which represents about 10% of the total body of students being taught.

    ·Mr Rowell was engaged (or was at least intended by the Applicant to be engaged) as one of the external contractors teaching other instruments. This was evidenced by the email of 23 June 2014 in which he said: “…. as we engage tutors on a contract basis you’ll need to obtain an ABN.”

    ·Mr Rowell taught guitar and voice at both the Morphett Vale and Black Forest schools.

    ·On average Mr Rowell had about 15 students, being no more than 3% of the total body of students being taught by the Applicant’s business.

    ·The Applicant did not have actual control over the way in which external contractors taught other instruments.

    ·On one occasion he recalls stating to Mr Rowell words to the effect that he would prefer if he taught his students to read music.  In response Mr Rowell declined to do so, saying he preferred to adopt his own chosen method of teaching.

    ·He recalls an occasion where he recommended that Mr Rowell use a “Rockschool” curriculum with his students, he declined to use it, stating that his students were beyond it.

    ·If Mr Rowell had of been an employee, then he could have and would have directed him to teach his students how to read music and to use the “Rockschool” curriculum, and he would have expected him to have obeyed such directions. However, he did not feel that he was in a position to direct Mr Rowell how to teach his students and based on his responses, he obviously felt the same way.

    ·Mr Rowell declined to teach bass guitar, teaching bass guitar is easier because it is not necessary to teach chords, and, certainly at an elementary level, the techniques required for learning bass guitar ought to be well within the capabilities of a skilled guitarist. He did not feel in a position to direct Mr Rowell to comply with the request to teach bass guitar.

    ·He did not mind external contractors choosing how to teach other instruments to students because:

    ohe and Mrs Storer were not confidently able to teach all of the other instruments, nor were they confident in developing such alternative skills in their existing staff;

    othe other instruments were not taught using the Forte Method, which was their core business activity; and

    otheir attitude was that, as long as the students who were learning other instruments were happy, then they were happy.

    ·He had invited Mr Rowell to attend several information seminars conducted by the Applicant’s business, however Mr Rowell always declined to attend.

    ·External contractors were free to delegate their sessions if they saw fit. Although Mr Rowell did not, in fact, delegate any of his sessions to a sub-contractor, he was, as an external contractor, free to do so.

    ·There was an occasion where a drum teacher could not teach a number of sessions and he arranged for an acquaintance of his to fulfil his teaching commitments. He did not feel any concern about the drum teacher arranging for someone else to fulfil his teaching commitments, provided that the Applicant was given a police check in respect of the substitute teacher (given that the students were children).

    ·If Mr Rowell had ever wanted to arrange a substitute teacher, he would have probably preferred him to first see if the relevant student(s) could be taught by one of the other guitar teachers already engaged by the Applicant as external contractors. But this would have just been his preference due to familiarity with those teachers. There was no basis on which he could have forced Mr Rowell to agree with his choice of substitute teacher.

27. Mr Storer provided a supplementary witness statement[32] setting out the arrangements the Applicant has in place in relation to employed piano/keyboard teachers. In support of his statement Mr Store provided a sample of an employment contract[33] typically used by the Applicant in respect of piano/keyboard teachers and the Forte Teacher Manual[34] which contains the course content and expectations relating to the training of those teachers. The Tribunal has had regard to that material.

    [32]    Exhibit 2, Supplementary Witness Statement of Stuart Storer and attachments.

    [33]    Exhibit 2, Supplementary Witness Statement of Stuart Storer and attachments – Sample Employment      Contract used by the Applicant in respect of Piano/Keyboard Teachers.

    [34]    Exhibit 2, Supplementary Witness Statement of Stuart Storer and attachments – Forte Teacher Manual.

28. At Hearing, under affirmation, Mr Storer told the Tribunal that:[35]

    [35]    Transcript, pages 12-37.

    ·During the period that Mr Rowell worked for the Applicant he was paid in accordance with a student roll that he submitted on a fortnightly basis.  No tax was withheld from Mr Rowell’s payments, nor did Mr Rowell ask them to do so.

    ·The Forte website is managed by the franchisor in Brisbane. While each individual school has a sub-page within that page, the actual content is put together by the franchisor.

    ·When taken to the Forte School of Music website, Forte School of Music Black Forest subpage, agreed that there was a page that the franchisor has made available to the Applicant to accept bookings for private music lessons, however not all of the instruments offered on the website are offered by the Applicant. If an enquiry came in for instance wanting cello or recorder lessons, they would respond saying that unfortunately they do not offer these lessons at this point in time.

    ·The Applicant’s core business is to provide keyboard and piano lessons using the Forte Method.

    ·He does not deny that the Applicant also has a business line that offers private music lessons, however they are a very small component of their student cohort.

    ·The enrolment form at page 174 of the Tribunal Book was the form that a parent would complete and in returning it would submit to the conditions of enrolment that appear in the fine print which require the parent to pay the fees in advance, on a term basis, and accept that the fee is not refundable except with four weeks’ notice.

    ·The parents or person enrolling would also accept the terms and conditions of tuition as set out at page 175 of the Tribunal Book.

    ·He confirmed that those terms are imposed by the Applicant.

    ·The terms and conditions provide that there will be no refunds or credits given for missed lessons and that if a teacher is unable to take a student’s lesson the Applicant will endeavour to provide an alternative teacher.

    ·He agreed that in doing so the Applicant was representing to the parent or student that the Applicant will endeavour to find an alternative teacher if a teacher is unavailable.

    ·He agreed that Mr Rowell commenced with the Applicant in June 2014 and that he was introduced to an existing body of students already learning the guitar at the school.

    ·His recollection is that Mr Rowell replaced the existing guitar teacher who was moving on.

    ·His recollection is that during the period Mr Rowell was teaching guitar for the Applicant it did not have another guitar teacher.

    ·He does not get involved in payroll however the suggestion that Mr Rowell was being paid $11 per half an hour lesson sounded about right.

    ·That he agreed that if the Applicant was charging $31.95 for a 30 minute standard half hour lesson and paying Mr Rowell $11 per half an hour, that the margin the Applicant makes on half an hour of Mr Rowell’s time was about 200 per cent. However, there would be GST, the cost of advertising, electricity and rent and other things that had to be factored into the fees plus a profit margin for the business.

    ·That the private lessons were not a major part of the business however the Applicant did make a profit in relation to them.

    ·He agreed that an additional benefit of the private lessons was that the Applicant caters to families where one sibling might be attending a structured lesson and the other might be interested in an instrumental lesson, therefore preventing leakage from its primary/core business by enabling parents to enrol another child in the separate offering.

    ·He primarily looks after the Morphett Vale school and Mrs Storer looks after the Black Forest school.

    ·They have a large room at each of the school locations in which they conduct group lessons as well as two smaller rooms at Morphett Vale and three smaller rooms at Black Forest in which private tuition lessons are held. Both locations also have a reception and waiting area.

    ·They encourage parents to always sit in the lesson with their child, because in a group lesson, the parent becomes a learning partner and that also applies to instrumental tuition lessons – they have an open door policy.

    ·Parents sometimes sit in the lessons.

    ·In the smaller rooms designed for private piano lessons there are two pianos and a desk with a computer. In the other smaller rooms, there would be a piano, because piano is the Applicant’s core business, so even with private lessons, the vast majority are piano lessons, there would also be a music stand, amplifier and leads and a guitar for the students to use.

    ·There is no sheet music available on the premises for teachers to use, however there are books available on the premises for parents to purchase.

    ·On occasion Mr Rowell would lock up the school at the end of the evening, purely because a late lesson may finish at 7 pm, by which time he had left. It was not a permanent key-holder situation. Mr Rowell did know the security code for the alarm system.

    ·He cannot recall how many staff the Applicant had teaching instruments other than piano and keyboards during the Relevant Period.

    ·He did not recall there being a student learning bass guitar at the Morphett Vale school at the time Mr Rowell was engaged. 

    ·It was always challenging finding any staff. Musicians are a special breed and they need someone to have musical and teaching ability as well as people skills.

    ·When looking for new staff they went about it several ways, they often receive email enquiries, word of mouth and recommendations.

    ·The age profile of the Applicant’s instrumental teachers, not including piano and keyboard tend to be young people between 18 and 21 years old.

    ·He did not agree with the proposition put to him that $11 for half an hour is a low payrate.

    ·When asked if he agrees that a more experienced teacher might be tempted to take private lessons and charge at the market rate, that, yes they may well be tempted.

    ·As far as he was aware Mr Rowell’s rate of pay was the same regardless of the level of student he was teaching.

    ·It is accurate to say that he was generally happy with the standard of teaching that Mr Rowell offered the Applicant’s students.

    ·He confirmed that his attitude was that as long as the students were happy he was happy.

    ·He on occasion received feedback from parents or students themselves about teachers and he passed that feedback on.

    ·He did not recall any instances of receiving feedback about Mr Rowell, but that does not mean it did not happen.

    ·He did not recall a conversation with Mr Rowell asking for his advice about what grade was appropriate for a student who was using the Rockschool material.

    ·He is an accredited Rockschool UK examiner.

    ·Rockschool is not a teaching method it is an assessment method which is not confined to guitar. It is confined to those instruments which would be deemed to be rock instruments or contemporary instruments, so it covers vocals, bass, drums, guitar, keyboard and ukulele.

    ·Rockschool London RSL is not a teaching book, it is a book which students purchase to prepare them for assessment according to the Rockschool system.

    ·He agreed it is accurate to describe it as a curriculum for preparation for an exam.

    ·It did not sound right to him that Mr Rowell says that he taught Rockschool to around a third of his students. He suggested to Mr Rowell that Rockschool would provide a good framework for students to progress by, and he took a look at the Rockschool books and stated that his students were far beyond that.

    ·He did not personally sit in on any lessons conducted by Mr Rowell – he did not interfere. He left it up to Mr Rowell to decide how to teach because: “As an independent contractor, as long as he was fulfilling his obligation to create an outcome, which was to have the students taught on a term-by-term basis.”

    ·It was true that the main measure of Mr Rowell’s performance was whether the parents were happy or not, because if the parents were not happy the students would not continue. Parent feedback and the ongoing enrolment of students was the main way that he evaluated whether Mr Rowell was doing his job or not.

    ·He agreed that he did not have any real way of knowing what method Mr Rowell was using in lesson other than what was fed back to him by parents.

    ·It was correct to say that he did not have any way of knowing which teaching materials Mr Rowell was using in the lesson.

    ·Confirmed he had a conversation with Mr Rowell in which he said his students were beyond using the Rockschool products and to the best of his recollection, Mr Rowell did not use it for any of his students.

    ·He agreed that there is a Hal Leonard Method of teaching guitar which is accompanied by books used to teach guitar.

    ·He agreed with Mr Rowell’s view that Hal Leonard had a greater number of pieces in it and Rockschool had fewer and a greater emphasis on playing those fewer pieces to a high level of proficiency.

    ·When asked if he accepts that Mr Rowell used the Hal Leonard Method to teach about 50 percent of his students, that he would say that could be correct.

    ·That he agreed that the rest of Mr Rowell’s students were offered a more bespoke offering, that is, some pieces that he found for them or pieces that they expressed an interest in learning.

    ·He recalls a conversation with Mr Rowell where he suggested to him that Rockschool might be a good framework for his students to learn by, but he did not say that he must teach that syllabus. Mr Rowell was free to refuse to do so, and he did.

    ·He agreed that Mr Rowell may well have had his own reasons for not using the Rockschool Method of teaching particular students.

    ·When asked if Mr Rowell declined his recommendation, whether he was in a position to insist: “No, I wasn’t, because I had no control over him as the – as an independent contractor. Had he been an employee, I would have said, “Look, I want you to use the Rockschool syllabus, and that’s the end of it,” but as an independent contractor, I could not exercise that control. I could make a suggestion but I definitely couldn’t insist.”

    ·He does not accept the suggestion that him not having control over how Mr Rowell taught was not correct, and that it was more that it would be counterproductive for him to insist that Mr Rowell adopt the Rockschool Method.

    ·When put to him that the simplest thing for him and Mrs Storer to do would have been to let Mr Rowell decide the method of teaching that he adopted: “You have to remember that Mr Rowell hadn’t taught previously or he had taught very little when he joined us.”

    ·Agreed that his evidence was that he was satisfied with the level of teaching ability offered by Mr Rowell and that the only feedback he had about that standard of teaching was feedback through parents and that if parents were happy he was happy.

    ·Agreed that the Applicant was not going to replace Mr Rowell because he did not want to use the Rockschool Method of teaching.

    ·When put to him that they certainly would not want to do that in the middle of the term: “No, we had no reasons to replace him because we could not exercise that degree of control.”

    ·When it was put to him that it was not because he felt he lacked the legal power, it was just that it was not worth the trouble, that: “It wasn’t worth the trouble.”

    ·He agreed that if Mr Rowell or any of their other instrumental teachers decided that they were not going to see out the rest of the term, that was the Applicant’s problem.

    ·He agreed that the Applicant had parents who had prepaid for term lessons that needed to be delivered.

    ·Agreed that if he had an employee who said they were not confident to teach bass, as a business choice they would not direct them to do so.

    ·He does not recall the issue with Mr Rowell and teaching bass as that occurred at Black Forest and not at the Morphett Vale school.

    ·He agreed he had a conversation with Mr Rowell about teaching students to read sheet music and whether it was appropriate to teach them to read tabs. He could not recall the actual circumstances of the conversation.

    ·That guitar music exists in two forms. It exists in standard musical notation which is the treble clef and using crotchets, minims and that sort of thing. It also exists in tab, which is short for tablature, which is basically a diagram of the guitar fretboard with numbers on each string indicating where the fingers need to be put to create the sounds on the instrument. There are two different ways of writing music for the guitar, sometimes they coexist.

    ·He could not vouch that the Hal Leonard Method books did not feature tab writing above the bars but that the Rockschool does.

    ·He does not see having tab sit alongside the musical notation as being a disadvantage. He does not agree with the criticism that students are only focused on the tabs and do not learn to sight read.

    ·He did invite Mr Rowell to attend a training session on Rockschool and he attended. The session was not a training session as such, it was an introductory session for all instrumental teachers on various syllabuses – on new syllabus developments that they may consider using.

    ·He agreed that the Applicant’s policy was that when a student missed a lesson there was no refund of the tuition and that it was the case that when that happened sometimes Mr Rowell would still get paid. He agreed that the Applicant still got paid for when the student did not turn up because of the prepayment for the term.

    ·He agreed with the answer provided on the form Mrs Storer completed for the ATO where she said there was a verbal understanding that it was Mr Rowell who was to provide the lessons.

    ·He agreed that it is important that the teacher that the Applicant selected is the teacher who delivers the lessons and that an important aspect of a successful learning environment is the rapport between the teacher and the student.

    ·He agreed that the parents would have an expectation that their child would have a degree of continuity with their instrument teacher.

    ·He agreed that it was the Applicant’s business to keep parents happy.

    ·When asked whether Mr Rowell’s understanding that he was to deliver lessons personally coincides with his understanding of the relationship: “Where possible he was to deliver the lesson but he was in a position that he could delegate if he wished to.”

    ·He personally did not tell Mr Rowell that he was able to delegate his lessons.

    ·As he recalled Mr Rowell did not miss many lessons, he agreed that about 10 in three years sounded about right.

    ·Mr Rowell’s position was always in these instances to reschedule. When Mr Rowell notified them that he was unavailable they would arrange make up lessons for him with the students and there were occasions when he arranged them himself.

    ·It was correct that the Applicant had to be satisfied that a makeup lesson was arranged because it had a contractual obligation to the parents to deliver the lesson.

    ·He accepts that Mr Rowell never arranged his own substitute teacher.

    ·Initially the Applicant did not have another dedicated guitar teacher, but half way through Mr Rowell’s tenure they had a voice teacher who could also teach guitar, however she was was not considered to be a dedicated guitar teacher.

    ·When asked if it suited him better if Mr Rowell’s missed lessons could be rescheduled: he would not necessarily say it suited them better, their main concern was that the lessons were fulfilled according to what we were asking Mr Rowell to do.

    ·If an instrumental teacher is going to be absent and a substitute needs to be found, they could not let that substitute be just anyone, they had to ensure that they met the child protection requirements and could do the job.

    ·Agreed that the form on page 173 of the Joint Hearing Book would be completed by Mr Rowell and others when they were seeking to be paid for lessons they delivered and that on the bottom of the page there is a reference to payroll but it was a form that was used by employees and by contractors. The form was not specifically designed for M Rowell – you could call it an all-purpose form. It covers instrumental lessons and also core Forte lessons as well.

    ·When then asked in the case of a substitute they needed to put another person on to the payroll: “Correct”.

    ·Outlined what he knew about the occasion when a drum teacher was unavailable to teach due to touring commitments and that a substitute was arranged for that drum teacher. He was not aware of how that substitute was found or paid.

    ·He agreed with the proposition that ultimately the problem of an instrumental teacher becoming unavailable was the Applicant’s problem to solve, because the lessons had been prepaid by the parent.

    ·He vaguely recalled a conversation with Mr Rowell towards the end of his engagement where he asked for a pay rise. His recollection was that he said they could not do that because the fees had been set for the remainder of the year.

    ·Agreed that the pay rise would have involved eroding the Applicant’s margin on the fees that had been set and that it was a commercial choice that had been made to refuse the pay rise.

    ·As far as he was aware that was the only time Mr Rowell sought to negotiate pay with him.

    ·He was not involved in payroll, so if more details were required concerning how a substitute teacher might be treated in terms of the payroll system, Mrs Storer would be the right person to ask.

    Evidence of Mrs Storer

1. In addition to the information provided in the Superannuation Guarantee – Status of the Worker Questionnaire – Principal/Payer[36] (see paragraph 9 above), Mrs Storer also provided a written statement[37] and gave evidence at Hearing. At Hearing Mrs Storer confirmed that she adopted her written statement as being true and correct to the best of her knowledge.[38] The Respondent raised an objection with paragraphs 17 to 20 of Mrs Storer’s written statement on the basis that they were hearsay. The particular paragraphs relate to Mrs Storer’s view that Mr Rowell took all of his students with him when he ceased teaching at the Applicant’s music schools. The Tribunal formed the view that it would be a matter for the Tribunal to determine how much weight should be put on this evidence rather than strike out the particular paragraphs.[39]

   [36]    Exhibit 1, Joint Hearing Book, T Documents, T3, pages 26-42, Superannuation Guarantee – Status        of the Worker Questionnaire – Principal/Payer.

   [37]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, pages 168-172.

   [38]    Transcript, page 40.

   [39]    Transcript, pages 41-42.

2. In her witness statement Mrs Storer provided that the handwritten responses in the Questionnaire were filled in by the Applicant’s accountant, based on her instructions and that she adheres to and adopts those responses.[40] Mrs Storer sought to clarify and augment the responses provided in the Questionnaire as follows:[41]

   ·In providing at Question 4 that Mr Rowell had an ongoing arrangement to teach students she was referring to the term by term arrangement whereby Mr Rowell was engaged by the Applicant (as an external contractor) to ensure that a particular body of students received tuition in guitar in respect of a particular school term. The arrangement was ongoing in the sense that it subsisted throughout a particular term and when renewed, it was renewed for the next ensuing term and so on.[42]

   ·The main reason that the Applicant asked its external contractors to wear a “shirt uniform” was so that parents could identify, with clarity, whether a given person was in fact a teacher. This was seen as desirable given the extent of young children being taught.[43]

   ·What she had meant when she referred to there being a minimum number of students to be taught was that she had a practice of ensuring that each external contractor would be allocated at least 4 students in any given day, which would equate to at least 2 hours of work.[44]

   ·She made the statement that Mr Rowell took all of his students when he ceased contracting at Forte School of Music because she had become aware from conversations with Mr Rowell and with parents of students that Mr Rowell had begun to take students on the basis that he would teach them at their homes.  She also knew that following Mr Rowell’s departure, the Applicant had in fact lost all of the students Mr Rowell had been teaching.  She thus assumed that he had taken them all. She provided examples of conversations she had in this regards with a parent and another guitar teacher.[45]

   ·Her response to question 32 which provided no to the question whether Mr Rowell could organise for his work to be completed by: “Another person engaged by the worker/payee (with or without your approval)” was provided as she interpreted the question to be asking whether Mr Rowell could have engaged a (sub) contactor whether or not he had the Applicant’s approval. If the question had of asked whether Mr Rowell could have engaged a (sub) contractor if he had the Applicant’s approval she would have answered yes. If in the alternative a question asked if Mr Rowell could have engaged a (sub) contractor if he did not have the Applicant’s approval she would have answered no.[46]

   ·“That Mr Rowell certainly could, if he wished, have engaged another (sub) contractor to perform his duties. The Applicant would have wanted to approve that other contractor, in order to ensure that the person had a police clearance to work with children.”[47]

   [40]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, page 169, paragraphs 7-9.

   [41]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, pages 168-172.

   [42]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, page 169, Paragraphs 10-12.

   [43]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, page 169-170, paragraph 13.

   [44]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, page170, paragraph 14.

   [45]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, pages 170-171, paragraphs 16-20.

   [46]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, page 171, paragraphs 21-24

   [47]    Exhibit 1, Joint Hearing Book, Witness Statement of Irene Storer, page 171, paragraph 22.

3. At Hearing, under affirmation, Mrs Storer told the Tribunal:[48]

   [48]    Transcript, pages 40-57.

   ·Page 173 of the Joint Hearing Book was the Forte School of Music student roll and that she used it generally for paying teachers fortnightly.

   ·It was her responsibility to pay people on behalf of the Applicant. She did the payroll.

   ·She did not take out withholding tax when she paid Mr Rowell.

   ·When asked if hypothetically Mr Rowell had of arranged for someone else to give one of the lessons that he would have otherwise taught within a two week period would she have seen it as being necessary to add that person to the Applicant’s payroll system if there was only one lesson involved, “No.”

   ·In that hypothetical arrangement if Mr Rowell had of presented her with the completed student roll and told her that one of the lessons had been performed by someone else that he had arranged to step in, she would have still paid Mr Rowell the full amount and she would leave it up to him to pass on whatever share the other person deserved.

   ·She recalled an occasion when a drum teacher needed a substitute to step in when he went to America for three months. She told him he could provide or could recommend a replacement that they could meet and who could take the students. He said he could not. So they got someone to substitute for him. When asked if she added that substitute to the payroll at the time, she said if she knows the set time she will have to, when you say payroll, yes, she would be paying her as a contractor.

   ·Her primary responsibility was the Black Forest school and she looked after the payroll for both schools.

   ·When asked if she had the initial conversation with Mr Rowell when he was first engaged by the Applicant, that from memory he had emailed Mr Storer.

   ·She agreed that the email from Mr Rowell dated 11 June 2014 was him providing to her his available times to work in the next semester and that he was only able to teach guitar or voice, not bass students and that he was doing that because she would then slot students that she had available into those times to scheduled their lessons.

   ·She agreed that Mr Rowell would advise her from semester to semester if his university timetable had changed and he had different availability and that she would then adjust the lesson times if necessary to fit in with his new availability.

   ·If they had no one to teach bass students then they do not have bass students and Mr Rowell saying he could not teach bass would have effectively meant the Applicant was unable to continue with the bass student from the time Mr Rowell came on board.

   ·Her inquiry of Mr Rowell by email on 16 June 2014 as to whether he uses a piano or wants backing or to play on the guitar for backing of songs was made after she received a request for information from a parent, it was not to ensure that the necessary equipment was available in the room.

   ·Mr Rowell at the time that he first came on board with the Applicant was dealing with Mr Storer and her in relation to the different schools.

   ·She agreed that Mr Rowell was not absent many times in the three years he was working for the Applicant, it would have been fewer than 10 times and mainly due to exams.

   ·She agreed that when Mr Rowell informed her that he was unavailable to give a lesson she would reschedule his lesson because she would ask him if he would like to reschedule and he normally said yes.

   ·She would contact the parent and occasionally Mr Rowell arranged the rescheduled lesson himself.

   ·It sounds right that there were times when Mr Rowell found the time she had arranged for him for a rescheduled lesson did not suite him and so occasionally he would arrange his own make-up lessons.

   ·She agreed that at times this was convenient for her because it mean that she did not have to go back and forth between Mr Rowell and the parents.

   ·She agreed that the Applicant’s contract with the parents was that the lesson had to be delivered as they had prepaid for the term.

   ·When asked if she agreed that Mr Rowell never arranged his own substitute, that: “If he suggests anyone, if he suggest someone, we need to approve it. You understand sir. If you have a child seven, eight years old, you would not like anyone to come in and teach your child in a room for half an hour that you don’t know of.”

   ·When asked if there was a situation where a teacher proposed a substitute: she would need to be satisfied with the substitute and that they would like to meet the substitute.

   ·She agreed that they would need to be satisfied about the child safety aspect of the proposed substitute and their general suitability to teach a lesson on a particular instrument to the student.

   ·From memory she agrees that Mr Rowell never arranged a substitute teacher to step in for him to give a lesson.

   ·When asked if she accepts that Mr Rowell was never told he was able to arrange his own substitute: “No. That’s not the case.”

   ·The Applicant did not have another dedicated guitar teacher after Mr Rowell came on board as they had limited guitar students.

   ·She agreed that if Mr Rowell or any of the instrumental teachers indicated to her that they were departing in the middle of a term, that would present a problem for the Applicant as they needed to deliver the lessons and they no longer would have a teacher to do so.

   ·She agreed that unless a parent told her that they are really happy or unhappy with a teacher she did not know.

   ·She was satisfied with Mr Rowell on the basis that she did not have a high level of negative feedback about him. She had received positive feedback about Mr Rowell.

   ·When asked if she was motivated to keep Mr Rowell as a teacher: “Yes, as long as the students still want to continue.”

   ·When asked if she recalled having once introduced Mr Rowell as “one of our teachers”: “Yes. All the teachers there are teachers, whether they are employees or contractors. They are teachers. I don’t say this one is a contractor, this one is my teacher. They teach young kids – to parents.”

   ·When asked if that is because from the view point of the Applicant’s business they hold out the teachers as representing the business: “Indirectly, yes.”

   ·When asked if from a point in time she had asked the teacher to wear a t-shirt with the company logo on it for that reason: “No. The logo on the t-shirt is to differentiate they are the teacher here, and parents know that they are the teacher, and happy to let the child go with that teacher in that room.”

   ·She agreed that there is a safety element to the t-shirt as well.

   ·When asked whether that safety element also reflects the Applicant’s representation to the parent that the wearer of the t-shirt is someone that you deem fit to be a teacher, “Yes.”

   ·She accepts that the personal relationship between teacher and student is an important aspect of the learning environment that she creates.

   ·She agrees that it is about having a rapport between teacher and student and that she has an interest in maintaining a continuity of the teaching staff to the extent she can.

   ·She finds it difficult to employ teachers for any instrument and to get good staff in any business.

   ·She agreed that in 2014 the pay rate to the teacher started at $11 per half an hour and that it was about right that the rate increased by 50 cents per half an hour every anniversary of the start date.

   ·She agreed that the charge out rate for Mr Rowell’s lessons to parents depended on the length of the lesson and the grade of the student.

   ·She agreed that at a starter salary of $11 per half an hour, the Applicant was charging about a little bit under three times that per hour to the parent, inclusive of GST and other costs.

   ·Mr Rowell did not teach advanced students at the Black Forest school.

   ·Mr Rowell was paid proportionally less for the shorter twenty minute beginner lessons, but she arranged three twenty minute lessons in an hour.

   ·At the Black Forest school they have three smaller rooms for private tuition lesson that they call studio rooms. The standard room has a piano, or digital piano and one of them will have a drum and music stand, chairs to sit on, a desk and an iPad or computer. The guitar room has a spare guitar as some students turn up without a guitar.

   ·When asked if she agrees that Mr Rowell was asked to get a police clearance certificate after he started at a time when a student came in who was government funded: that was properly not the timing, she had asked him before as everyone needs to have a certificate done. He said he will, because that is the number one thing we do – a police clearance check or now a check for safety of children. It is not true that Mr Rowell was not asked for a police clearance check prior to when a student started who was government funded – she asked teachers before they start to get the check. Some of them take a long time to get to it, we have to chase them as soon as they start.

   ·When asked if the position was that she had put Mr Rowell in a room with a student before he had a police clearance certificate: “Most rooms have got a parent in there as well.”

   ·When asked whether the Applicant had legal reasons for needing a police clearance certificate, that it did and that she had not produced records of having done so for Mr Rowell as she had not been asked to.

   ·When asked whether it sounded right to her that she said that she would reimburse Mr Rowell for the cost of obtaining the police clearance certificate when this particular student came along, that: “… that’s probably my misjudgement. He say he’s a student, it costs money to have this check. And I say, okay, you need it to teach, I’ll pay for it – being kind-hearted – and which I did.”

   ·It was correct that she had a dilemma, Mr Rowell did not have a police clearance certificate and was not going to get one and she needed to make sure he did have one because the onus was on the Applicant if something went wrong. The Applicant had the contractual relationship with the student or parent and a duty of care to look after the student.

   ·She cannot remember whether Mr Rowell supplied her with the name and number of the person who substituted for the drum teacher, however that could be the case.

   ·She agreed that she paid that substitute directly for the lessons that she gave as a substitute for that teacher because the teacher was going away for a month not just one shift, she could not have not paid her directly.

   ·She agreed that Mr Rowell had asked her for advice about how to engage with students from different cultural or linguistic backgrounds.

   ·She agrees that the teachers that the Applicant had teaching instruments other than keyboards and piano were mostly younger people aged between 18 and 21.

   ·She could not remember exactly how many other people she had teaching other instruments during the Relevant Period, however it would have been no more than four or five.

   ·She agreed that the Applicant’s terms and conditions were that if a student missed their lesson there would be no refund of their tuition fee and that if that happened and if the teacher had turned up for the lesson the teacher was still paid.

   ·She agreed that in her witness statement she said that the Applicant had lost all of its guitar students and that she had heard some things from other people about what Mr Rowell was doing and that this was correct.

   ·She agreed that this was the full extent of the information she has about what Mr Rowell did after he ceased teaching with the Applicant’s schools.

   ·When suggested to her that was not a basis for the Tribunal concluding that 100 per cent of Mr Rowell’s Forte School of Music based students continued lessons with him at his new business location, that she presumed it was 100 per cent he had taken with him.

   ·She confirmed that she was making that assumption based on none of the students enrolling for the next term.

   ·That the Applicant provided a payment summary to Mr Rowell and to all of the contractors and teachers at the end of year as that was what the accountant suggested.

   Evidence of Mr Rowell

4. In addition to the information provided in the Superannuation Guarantee – Status of the Worker Questionnaire – Worker/Payee[49] (see paragraph 10 above), Mr Rowell provided a written statement[50] and gave evidence at Hearing.

   [49]    Exhibit 1, Joint Hearing Book, T Documents, T4, pages 43-58, Superannuation Guarantee – Status of      the Worker Questionnaire – Worker/Payee.

   [50]    Exhibit 1, Joint Hearing Book, Witness Statement of Jayden Rowell, pages 186-192.

5. In his witness statement, Mr Rowell provided:[51]

   [51]    Exhibit 1, Joint Hearing Book, Witness Statement of Jayden Rowell, pages 186-192.

   ·He has had music lessons since the age of 5. He learnt the guitar first, then piano for a year or so then voice and saxophone.

   ·He was awarded a Music Scholarship at high school and also studied classical music.

   ·He has no music teaching qualifications, however he enjoys teaching music and feels that he is good at it given his personal experience in learning music and skill as a musician.

   ·He was attracted to the role with the Applicant as he enjoyed music and teaching and had a strong inclination that he would be good at it. He also enjoyed working with children and knew it was something he wanted to do long term and thought it would be good experience for his future career path.

   ·He was recommended to Mr and Mrs Storer by an existing employee. They contacted him and asked him to come in for a shift at relatively short notice to fill in for another teacher.

   ·On his first day he was required to teach a bass guitar lesson. He does not teach bass. He told Mr and Mrs Storer that in an email.

   ·Mr and Mrs Storer requested that he commence teaching the following term to replace the teacher that was leaving, he provided the times in which he was available. As a university student he was only available around his university schedule.

   ·He only recalls one other time that he was asked to come into work at a time outside of his availability.

   ·Mr and Mrs Storer scheduled most lessons including make up lessons. In rare circumstances he may have scheduled a lesson with the relevant student because it was more efficient in the circumstances.

   ·There was no written agreement about him working at Forte.

   ·He obtained an ABN because Mr Storer requested he did so and also because he had just finished high school and wanted the opportunity to perform gigs and was told it was best to get an ABN to play gigs.

   ·He advised Mr and Mrs Storer when he was unavailable because of exams and they would have told the students and then organised a fill in teacher or for him to do a make up the lesson.

   ·If a student could not attend a lesson, then generally Mr and Mrs Storer would organise a make up lesson where possible. When a make up lesson was scheduled, he was paid only for the make up and not for the original non attendance. If a make up lesson was not scheduled sometimes he got paid and sometimes he did not.

   ·He never thought he could bring in someone to replace him if he could not teach a lesson. Mr and Mrs Storer organised that.

   ·He understood his job was to attend at either the Morphett Vale school or the Black Forest school at the time scheduled by Mr or Mrs Storer and teach the student guitar, vocals or music theory. The lessons were mostly 30 minutes. He recalled that his youngest student was about 8 years old and the oldest was at least 45 years old. The students ranged from beginners to advanced.

   ·He was referred to by Mr and Mrs Storer to the students as “one of our teachers” or the “guitar teacher” or “Mr Jayden”.

   ·He often worked from a syllabus. Generally, it was the Hal Leonard Progressive Guitar Method but then later Mr and Mrs Storer were encouraging him to teach from the Rockschool syllabus. Sometimes depending on the student, he did not work from a syllabus, because as studies have shown if a student enjoyed music they learn it faster and are motivated to practice during the week. He felt he was better able to progress them as a musician that way.

   ·At the beginning he worked around 10 hours per week and this increased over the period he worked at Forte.

   ·Sometimes he was the last teacher so he would lock up the premises.

   ·There was a yearly concert which Forte held. He felt pressured to attend and for all but the last one he attended the full day. The students paid a ticket fee. He was not paid for attending on those days.

   ·Each fortnight he completed a lesson summary template and provide it to Mr and Mrs Storer. The sheet was used to calculate the payment. The amount was then deposited into his account.

   ·He did not receive fortnightly payslips or any record of payment aside from the end of fiscal year payment summary. He did not know how the payments were being calculated, after asking a number of times what his rate was, he recalls being told that it was set at about $11 for half an hour.

   ·Mr and Mrs Storer never observed him teaching lessons. But provided him with feedback from time to time based on feedback they received from students parents.

   ·He never had regular meetings with Mr and Mrs Storer. He recalls occasions where he would mention to them that he was impressed by a student.

   ·He sometimes asked Mr and Mrs Storer for advice. He recalls asking Mr Storer about what grade he felt was appropriate for a student using the Rockschool Method. He also occasionally spoke to Mrs Storer about how to engage a student where they were from a different cultural background.

   ·He never attended meetings or training.

   ·He was not required to get a police check. He was asked to obtain one during his work with the Applicant as there was a prospective student who would be receiving lessons as part of a government funded program. Mrs Storer then reimbursed him. He never got a working with children check.

   ·He was not required to find his own students to teach at Forte.

   ·Other than one situation, he never taught a Forte student outside of his Forte hours.  That situation was towards the end of his work with Forte and he taught the student at their home as a make up lesson.

   ·He did not have any insurance and does not recall being asked to get any.

   ·Everything he wanted was provide or arranged by Forte. He just told Forte or the parents which book he recommended. Each location had a guitar, music books, sheet music, pencils, paper, amplifiers, leads, backing tracks which he would use to teach the students. He preferred his own guitar and used it when he could. He recalled finishing university on Friday and did not want to carry his guitar to the Black Forest school so he would use the Forte guitar.

   ·Towards the end of him working at Forte he had a conversation with Mr Storer where he asked for his pay rate to be increased. He recalls Mr Storer reprimanding him on the phone saying he had no right to inquire about the pay increase. He felt that he was not valued by the Applicant and decided to cease working there.

   ·He told students he was leaving but did not advertise his services at Forte. Some students asked him if he was continuing to teach outside and he said he would.

   ·Some students contact him and others did not. It was less than 50% of the students that he taught at Forte. He taught a couple of students at his house and some at their house, he never had any business premises.

1. At Hearing, under affirmation, Mr Rowell told the Tribunal:[52]

   [52]    Transcript, pages 66-118.

   ·That he did not wish to make any corrections or alterations to his witness statement.

   ·That the allegation made by Mrs Storer that when he left Forte Music Schools he took all of his students was blatantly false. He informed most of his students he would be leaving on either the last lesson or a few lessons prior to the last lesson. A few students, when he informed them that he would be leaving asked if they could continue learning with him from outside of Forte, however not even close to all of them. He estimates it was less than half of the students that continued on with him.

   ·The only students he had contact with after he left was with those who had themselves asked to continue with him.

   ·While he was working at Forte he posted a Gumtree ad and printed flyers that referred to that advertisement however nothing eventuated from either. He did not distribute the flyers.

   ·He has not advertised his services as an instrumental teacher since leaving Forte School of Music aside from the Gumtree ad, he switched fields.

   ·It was Mrs Storer that asked him to get a police check. It is difficult for him to say with certainty when that was however, it was not near the beginning and not right near the end. Probably around the middle of his time working at Forte. He can say with certainty it was not within the last 3 months or the first year.

   ·The difference between a police check and a working with children’s check is that a police check is just a cursory glance at your criminal history for serious criminal charges whereas the working with children check, obviously as you are working with children, goes more deeply into it. During his time at Forte he did not have a working with children check however he has one now as he is pursuing a job in education as a primary school teacher.

   ·When he was teaching at Forte he was unable to teach fewer than 10 times, a few because of illness and the rest due to university obligations.

   ·When asked about whether he knew about the drum teacher for whom there was a substitute teacher, that:

   oHe was told by the original drum teacher himself and that he needed a substitute.

   oHe was likely to have heard this also from Mrs Storer as it was at the Black Forest school.

   oHe believes he was told in the coffee break room at the Black Forest school at which point he recommended a friend of his.

   oHe recommended the person who became the drum teachers substitute to Mrs Storer. That person then took up the substitute position and was then subsequently teaching herself on certain dates.

   ·Rockschool is a syllabus for music students and so it is a grade book in which students can learn pieces and then sit an exam, in which they perform the pieces and are given a grade and assuming they pass they move up to the subsequent level.

   ·He first found out about Rockschool when Mr Storer invited him to come in for a small training course in which they watched a video of a student performing and then afterwards were asked to tell Mr Storer what grade they thought the student would receive.

   ·He did subsequently use the Rockschool product for some of his students, roughly about 30 percent. His other students were taught using the Hal Leonard book series or by sourcing his own resources for them. About 50-60 percent of students would have learnt from Hal Leonard.

   ·He had two students who were a level 5 or above on the AMEB grade levels, one in respect of guitar and another with respect of vocals. They had not passed the tests as neither of them had sat the exams, however they were just of a standard already that sitting those exams would have been pointless as they were clearly already more skilled. He had assessed them as exceeding those levels.

   ·When asked whether he declined to teach students to read music as provided by Mr Storer in his written statement: he did not decline to teach his students to read music. He is in fact a firm advocator for them reading music. It was his recollection that he had said to Mr Storer that he was annoyed that the Rockschool syllabus by default including what is known as tablature which is essentially picture graphs for music – and his students would rely on that rather than learn to read the music notation which he believed was to their detriment. He feared that the students skills would not be applicable to other musical instruments if they only learned the tab method.

   ·He did not recall a conversation with Mr Storer where he said that his students were beyond the Rockschool curriculum, aside from him telling Mr Storer that he had one particular student, the aforementioned guitar student, who was himself above what Rockschool was offering.

   ·The vast majority of his students of whom he recommended the Rockschool curriculum to took it up.

   ·Confirmed that he was aware that the ATO conducted an audit of the Applicant in 2018 as to whether it had complied with its superannuation guarantee obligations with regards to him.

   ·He recalls completing the ATO questionnaire and realises he put his date of birth in as the date it was signed but it would have been completed in 2018.

   ·He commenced teaching at the Forte when he was about 18 and half or 19, it was after the Christmas break straight after he finished high school.

   ·When asked about his experience as a guitarist and whether he just played for his own benefit or if he ever played in a band: he had not played in a band, that aside from playing with friends and dreams of grandeur of being a rock star.

   ·He disagreed with the proposition that the bass guitar is essentially the same as a guitar except that the lower four stings are an octave lower and it does not have the top E string or the B string.

   ·The sheet music is written completely differently for the bass guitar, you are required to hold it differently and pluck the strings in a different manner and it serves as a different function in music. Whereas the guitar you must strum the chords or play lead notes, a bass guitar plays a bass line which is not something you can do on a guitar.

   ·The bass guitar is no more or less difficult than other instruments, they are all different. It is not very similar to the guitar, it has similar features but all musical instruments have similar features. It is not identical, the spacing is different.

   ·He started teaching music to one friend and one family member when he was between 16 and 17 years old. He averaged teaching them a lesson once a week during the school terms and he finished teaching them before he started at the Forte School of Music as one lost interest and the other choose to focus on their school work. He was not paid in relation to the family member and was paid on an adhoc basis in relation to his friend. He estimates the total number of lessons delivered to these two individuals was 300.

   ·He agreed that he had very limited experience as a teacher when he started teaching at Forte.

   ·He agreed that he felt he did a good job teaching students at Forte and that he established a good rapport with the students.

   ·He believes that during the time he taught at Forte that he only had around 30 students at any given time and that overall, there would have been around 50. This allows for students ceasing lessons and new ones taking their place.

   ·The reasons that students leave ranged from them no longer being interested in guitar or the parents realising that the student was not going to put in the effort and therefore withdrew them from the lesson or due to clashes with schedules.

   ·He agreed that students typically left at the end of a term.

   ·He agreed he understood that at least in the case of younger students their parents had committed financially to a term at a time and that Forte had also committed to the student for a term, so it was a mutual commitment that the student had paid up front for that term. However, he also believed there were cases in which certain students would pay on a weekly basis.

   ·He accepted that there was a correlation between his remuneration from the Applicant and the contract it had with the student.

   ·He agreed that he was not being paid a salary for attending at Forte irrespective of what he was doing at Forte, he was instead being paid by reference to the specific lessons he provided.

   ·He had not previously raised concerns about gaps in his schedule and his pay until toward the end of his time at Forte as there was no need to. There were not many gaps.

   ·During the occasional gaps he would make himself a coffee while he waited or do some planning for another student or any number of things.

   ·He accepts that Mrs Storer tried to schedule lessons so that there were no gaps.

   ·He did not consider filling out the fortnightly sheet as a request for payment. It was a report of which students attended or not. For the first year his pay was not consistently the same amount and he was not sure what his pay rate actually was, he had tried to work it out but it did not make sense.

   ·When asked if he proposed to Mr Storer a change in his arrangements: he would define it as a query, but he did propose a change. He expressed his frustration with the situation that he would attend to a lesson and then if his recollection is correct, this was during a period in which there would suddenly be an hour gap, and he proposed his frustration that he was given no say in whether or not such a gap occurred and he would be asked to attend and there would be an hour in which they would not pay him. He did not believe that was a fair remuneration for his services.

   ·When it was put to him that he was not providing any services in the hour gap: he was attending the establishment, which is what he considered working. He was asked to attend the establishment from say as a hypothetical from 3 pm to 7 pm. It was unfair that they asked him to attend for that period of time and yet there would be an hour during that period, in which because they were unable to slot a student in or students in, he would not be paid.

   ·He agreed he was frustrated because it was a waste of his time.

   ·He wanted first and foremost students within that hour.

   ·He agreed that there were some teachers at Forte that he knew and others that he did not.

   ·He was aware that Forte had its own method, a syllabus for early levels of piano. However, it was his understanding that for higher levels, from grade 1-3 that roughly alights to the aforementioned Rockschool grades, that this was more of an AMEB system that is national and is the same as what you encounter with people outside of Forte.

   ·He was aware that the Forte business was a franchise business and he accepts that franchises in general are businesses that have their own particular way of going about things.

   ·He was aware that the piano teacher he knew well had been trained in a particular way of doing things and confirmed he was not trained in how to do things at Forte using the Forte Method of teaching.

   ·Confirmed he was surprised when he first started at Forte that he was effectively stuck straight into a lesson without any form of induction.

   ·He agreed that at both Black Forest and Morphett Vale he was left to his own devices when it came to teaching guitar and he was never supervised. He taught the students by himself.

   ·He agreed that at the time of his engagement the Applicant could have chosen anyone to deliver the guitar lessons, it did not have to be him. Mr and Mrs Storer needed someone to teach guitar as they were unable to do it themselves.

   ·When asked if they were really happy to have almost anyone who could potentially do the job: they were happy to have a guitarist and they were happy to have someone who was recommended by another employee and then upon the positive feedback from the students of the teacher he filled in for. They were happy to employ him from there.

   ·When put to him that it would not matter if on any particular occasion he, himself had got another teacher to fill in for him if he needed to it would not have mattered: it was never his understanding that he had the ability to just have another teacher come in, in his place.

   ·It would have mattered because he does not think that Mr or Mrs Storer would have been happy if he just had someone else come in and fill in for him. He would have had to ask them and provide them with details first.

   ·It was still his position that he was unsure whether he had the right to delegate.

   ·When put to him that it is fair enough for the Tribunal to conclude that in response to Mr Storer’s statement to him that Forte engaged tutors on a contract basis, so he needed to obtain an ABN, the way he dealt with that statement was in effect to agree with it and to confirm he would provide an ABN of which he did: yes but at the time he was not really sure what on contract basis meant.

   ·Confirmed he applied for and obtained an ABN, he did it through a website.

   ·When shown an extract from ABN Lookup in relation to his name, confirmed the details.

   ·He agreed it was clear that he obtained his ABN in response to Mr Storer’s request.

   ·He kept track of where his students were up to by using the A5 notepad that most of them had, which on a weekly basis after each lesson he would write down the things he wanted them to practice. Then at the beginning of the next lesson he would ask for their book to see what they were going to focus on that day. He was also reliant on his memory, the journal acted as a reminder.

   ·Confirmed he also had contact with parents and as for the younger students he often liked them to be in the room.

   ·How he went about rescheduling lessons on the occasion when he did so was by talking to the student face-to-face when they came in for the next lesson.

   ·That he first lodged a tax return for the 2019/2020 year as he was advised for previous years he did not need to lodge as his earnings were below the threshold limits. He did not pay any tax or claim any deductions for previous years. During the Relevant Period, the only income he earnt was from the Applicant.

   ·Confirmed that to his knowledge there was no other documents aside from the emails that record his arrangements with the Applicant in relation to his terms and conditions.

   ·He agreed that there were no documents stating that he was prevented from teaching students outside of Forte and that no one told him he was prevented from doing so. He agreed that he provided an incorrect answer to question 15 of the questionnaire in this regard.

   ·He answered no to the question as to whether he worked alone, because the way he interpreted the question, the answer was yes as there were other employees at the establishment. But no, he conducted the individual lessons alone.

   ·It was his understanding that it would not have been him organising another person to do his work or tasks if he was unable, that this would be done by Mr or Mrs Storer. As was the case in relation to the drum teacher example. He would have been able to recommend someone to Mr or Mrs Storer and they would have contacted them and arranged it from there, but it was not his understanding that he would have been organising it.

   ·When put to him that it was the case that he just did not have an understanding about that: he was unsure of the exact details, but that was something he was fairly certain on, that he could not just arrange for a teacher to come in without giving their details to Mrs Storer.

   ·When put to him he had then gone from being unsure to fairly certain that even with the approval of Mr or Mrs Storer he could not have engaged someone else to come in and take his spot for a session or two, that:

   Well, no, it’s my understanding that that wouldn’t have been the – the order of events. It’s my understanding that had I – were I to miss a day of lessons, I would tell Irene about it – well, Irene or Stuart about it first, and then if I had a suggestion of someone to fill in for me, I could provide their details. It wasn’t my understanding of – the order of events would have necessitated me just solely getting permission from Irene and then having … the teacher come in.

   ·After being given a hypothetical of him saying to John Smith that he would like to subcontract him to do his three lessons and he will pay him the $30 that he would have come to him had he done the lesson, that even with the approval of Mr and Mrs Storer it still would not have been up to him and the other person, it would have still involve Mr and Mrs Storer. This is what occurred when he filled in for the previous teacher on his first day and also what happened with the substitute for the drum teacher.

2. At Hearing the following exchange occurred in relation to the issue of delegation:[53]

   [53]    Transcript, pages 109-111.

   Applicant’s Counsel: But what I’m asking you is not about a previous situation you were involved in.  I’m asking you as to your understanding of what your contractual rights were, and your answer to this point in time has been first in this document, a statement that you’re unsure, and it has now graduated to an emphatic no, that you would not have had that right.  And I’m putting to you, Mr Rowell, that you don’t really know whether you had that right?

   Mr Rowell:  ‑‑‑Well, no. Once again, I - I would - I would refer your attention to the paragraph that I wrote. I said I wasn’t sure on the exact details, but there were situations.  So whilst I wasn’t sure of the exact details of the - how to do this - and by your own admission, it’s confusing wording.  So hence why I wrote down that I was unsure.  However, in the hypothetical situation you gave, no, I would not subcontract John Smith and pay him the $30.  That is, in my - and I can be - you know, as - to your use word, emphatic in my declaration that no, I would not pay John Smith.  It would be Irene or Stuart that would pay John Smith, and it was - it’s my understanding that I would never have the opportunity to pay John Smith as I would never receive that initial payment to provide John Smith with.

   Applicant’s Counsel: Okay.  And where did you get that understanding from, Mr Rowell?

   Mr Rowell: ‑‑‑Based on business proceedings and the way it worked.  So it was never - it - I feel like that is something that we would have to be expressly informed that we could do, and also based on the nature in which when I told Irene or Stuart that I was unable to attend a lesson, it was not conducted in a manner that would facilitate such a scenario.  It was conducted in a manner in which, you know, in this situation they asked me to make up my students (indistinct) it was never - yes.

   Applicant’s Counsel: So your evidence is that you - you say to the tribunal that you could not have done it for two reasons. One, because it was the type of matter that would have had to have been expressly communicated to you as something you could have done in order for you to have been able to do it?

   Mr Rowell: ‑‑‑Yes.

   Applicant’s Counsel: That was the first proposition you put.  And the second was that there had been an instance where it didn’t happen that way?

   Mr Rowell:  ‑‑‑There has been, yes, many instances in which the - the - that was not the type of scenario that happens.  Instead, it was a teacher was unable to attend a lesson, and in some cases, if (indistinct) by Irene or Stuart, they would arrange for someone to come in, or in cases such as with drums, they were unable to find someone to fill in.  They would allow, you know, a recommendation from another teacher or a recommendation from someone, at which point - at which point Irene or Stuart would be engaged with that said person.  It was not a - it’s not - it was not a relationship that would go - it’s not as though the payment would go from Irene to the original teacher to the subcontractor teacher (indistinct).

   Applicant’s Counsel: Well, Mr Rowell, you have absolutely no idea what the arrangements were between other people at Forte, between drum teachers filling in for drum teachers.  You were not involved in that?

   Mr Rowell: ‑‑‑Yes, I was.

   Applicant’s Counsel: I see. So you were involved in the contractual arrangements (indistinct)?

   Mr Rowell: ‑‑‑No, you have (indistinct).

   Applicant’s Counsel: No, I’m asking a question. You were involved, were you, in the contractual arrangements between those people as to their remuneration, were you?

   Mr Rowell: ‑‑‑No.

   Applicant’s Counsel: No, you weren’t. You have no idea what those arrangements might have been, do you?

   Mr Rowell: ‑‑‑Well, those are two separate statements. I know the person and I spoke to them, and I know how that was conducted, but no, I wasn’t involved in the contractual arrangements.

   ….  And I also know from my experience when I filled in for the initial teacher on my first day of working there that my - my engagement was directly to Irene, not to the other teacher.

   Applicant’s Counsel: Yes. Yes. So where we end up with is that you’re saying to the tribunal that your understanding about this complex matter that we’re grappling with derives from one example, is that right, that you were personally involved in?

   Mr Rowell: ‑‑‑The one example being my initial day of employment there?

   Applicant’s Counsel: That seems to be what you’re telling the tribunal?

   Mr Rowell: ‑‑‑Yes. Yes. There was other events, I believe, in which I may have filled in for another teacher who was, you know - I think the name was Katie, from memory, in which they had a guitar student or two and vocal students, and they also had piano students, and for them - in that situation, the piano students were rescheduled with her, whereas I would - I taught the guitar and vocal students on that day.

   Applicant’s Counsel: Now, we have - in a different context, we have looked at the terms governing your contractual relationship with Forte and we have seen that those terms are very brief. They’re really (indistinct) just contained in an email.  There was no written document stating whether or not you could yourself engage someone to fill in for you with the approval of Stuart or Irene, was there?

   Mr Rowell: ‑‑‑No, there was not.

   Applicant’s Counsel: No.  And there was no express discussion in which there - it was put to you one way or the other whether you had the right to engage someone to step in for you with or without their approval.  It wasn’t discussed either, was it?

   Mr Rowell: ‑‑‑No, it was not discussed.

1. Mr Rowell’s evidence was that he did use the Rockschool Method of teaching with approximately 30% of his students. Mr and Mrs Storer were unable to dispute this.

2. The Applicant contended that the evidence in relation to control of the worker clearly indicated that Mr Rowell was not an employee as Mr Rowell acknowledged that he had never been supervised and he agreed that the Applicant did not have the skills to supervise him.[67]

   [67]    Transcript, page 123.

3. The Respondent contended that the control test is no longer as decisive as it had previously was as employers are getting bigger, with needs that are more diverse and work that is getting more specialised. The Respondent submitted that:[68]

   ..many organisations would have IT specialists, management accountants, engineers, actuaries, who are unquestionably employees but for whom the employer simply has no hope of directing them in the performance of their work at a fine grain level.  What they can direct though for employees in that category, and all employees, is well, what project they are going to work on. What deadline do they have for that work. How are they going to be directed to spend their work hours at a more general level. And that is control and the situation is no different here, the Storers and Mr Rowell all admit that they did not supervise what he did in the class room with his students.

   Both Mr and Mrs Storer freely accepted that they relied on what they could gather from feedback that they received from parents and Mrs Storer said in the questionnaire the worker did his own thing and conducted the lessons as he saw fit.  She said quality control was done by the parents, which we can determine by parents’ complaints. .. Mr Storer’s take on the same point was a bit more of a positive spin, he said if the parent are happy, we are happy. But the key ways in which the Applicant did control Mr Rowell’s work were the ways that made it their business, and not his business. Their business was getting students in classes with teachers and charging them for it. So, its business was to marshal its teaching resources and to direct its teachers to deliver the service that it had contracted to provide to parent or students and in aid of this it scheduled the classes. It directed Mr Rowell where he needed to be and when, it rescheduled classes when he wasn’t available and, at a practical level, this is the way it controlled Mr Rowell.

   [68]    Transcript, page 135.

4. The Applicant contended that the size of the enterprise matters, in a large company there are structures in place which, in effect, give rise to supervision in a structural manner – that is not the case here.[69]

   [69]    Transcript, page 145.

5. The Respondent drew the Tribunal’s attention to the Vabu case of in which cycle couriers were found to be employees of the courier company. In that case the couriers provided their own bicycle, were paid per job, carried a radio and were directed by the courier company to pick up a parcel here and deliver it there. How they did it was up to them but they were going to ride their bicycles to do it.[70] The Respondent contended that the following passage of the majority of the High Court at [57] has relevance to the control an integration tests:

   The couriers had little latitude.  Their work was allocated by Vabu’s fleet controller.  They were to deliver goods in the manner in which Vabu directed.  In this way, Vabu’s business involved the marshalling and direction of the labour of the couriers, whose efforts comprised the very essence of the public manifestation of Vabu’s business.  It was not the case that the couriers supplemented or performed part of the work undertaken by Vabu or aided from time to time; rather, as the two documents relating to work practices suggest, to its customers they were Vabu and effectively performed all of Vabu’s operations in the outside world.  It would be unrealistic to describe the couriers other than as employees.

   [70]    Transcript, page 136.

6. The Respondent contended that because Mr Storer did not insist that Mr Rowell used the Rockschool teaching method does not indicate he did not have the legal right to direct him. The Respondent contended that it was completely understandable when it was hard for the Applicant to fill the teaching positions, their main concern was keeping parents happy and Mr Rowell seemed to do that. Both Mr and Mrs Storer had said that they were generally happy with Mr Rowell’s standard of work and it would have been a real problem for them if one of the teachers left in the middle of the term. The Respondent submitted that it would have therefore been counterproductive for them to force the issue, whatever the true nature of the legal relationship.[71]

   [71]    Transcript, pages 136-137.

7. The Applicant contended that the Vabu case is distinguishable as in that case the company knew what the workers were doing, they were couriers and it was incredibly straight forward what they were doing, to be contrasted to this case where the simple fact is that the Storers really did not know what the Mr Rowell was doing. The Applicant contended that the nature of the business in Vabu of courier delivery was consistent with the overall business. The Applicant contended that in fact, it was the overall business to be contrasted with the situation here where the nature of the work was significantly differentiated from the overall business. Unlike here, the courier drivers were not, purporting to run their own separate business.[72]

   [72]    Transcript, pages 145-146.

8. The Tribunal does not accept the contentions of the Applicant in this regard. It is difficult to accept that Mr and Mrs Storer did not know what Mr Rowell was doing. They knew he was providing guitar lessons, from parent feedback and what appears to have been consistent enrolments that overall, the parents and students were satisfied with those lessons. They may not have known the specific methods of how Mr Rowell was instructing the students however at the end of the day they were not that concerned as long as the lessons were provided. 

9. The Tribunal agrees with the contentions of the Respondent that just because Mr Storer choose not to impose his preferred method of teaching upon Mr Rowell did not mean he could not do so. In fact, Mr Rowell’s uncontested evidence, because neither Mr or Mrs Storer ever supervised his lessons was that he did use the teaching method recommended by Mr Storer for a third of his students. The Tribunal’s view of the evidence provided by Mr and Mrs Storer is that if the parents and students were happy, they were happy and they would not rock the boat because finding a new teacher to honour the contracts they had with the parents and students was difficult.

10. In considering the evidence before it as a whole the Tribunal considers that the Applicant did have a degree of control over Mr Rowell, being that which was exercised by, time, duration and location of lessons, fees paid for lessons, uniform to be worn and that which was not exercised, being how he taught the lessons. The Tribunal considers this indicia weighs towards a relationship of employment.

    Integration

11. The level of integration into the business is an indicator that is directed to the fundamental question of whether the worker serves his employer in his employer’s business or whether he carries on trade or business of his own.[73]

    [73]    See Marshall v Whittaker’s Building Supply Co Ltd [1963] HCA 26; (1963) 109 CLR 210 at 217 and Hollis v Vabu Pty Ltd [2001] HCA 44.

12. The evidence before the Tribunal clearly demonstrates that the Applicant’s business is one of offering music tuition. This point is uncontroversial. The Tribunal accepts that there were two distinct business lines for the Applicant’s business that of providing piano/keyboard lessons which were operated using the Forte Method of teaching and that of private lessons for other instruments. While the Applicant’s evidence is that the teaching of other instruments was adjunct to its core business, it was a profitable part of its business. The evidence demonstrates that the Applicant, not Mr Rowell sourced the students, in fact the other instrument lessons were offered to protect the core business from leakage of students by offering tuition to the siblings of its piano/keyboard lessons the opportunity to also take music lessons at the Applicant’s schools of music.

13. The Tribunal acknowledges the Applicant’s evidence that the provision of lessons of other instruments represented a small part of their overall business, approximately 10% of its total revenue and that its core business is delivered in accordance with the Forte system, in line no doubt with its franchise agreement. However, the Tribunal notes that the offering of lessons for instruments other than piano and keyboards is also a recognised offering by the Franchised Forte Schools of Music as demonstrated by the website of which Mr Storer told the Tribunal is managed and run by the franchisor. As such while the Tribunal recognised the difference in the teaching models of the two arms of the Applicant’s business, they are consistent with each other and in fact operate to support each other.

14. The Applicant contended that size of a business does not affect how the legal principles apply, and in this case if one does not allow oneself to be too troubled by how tiny Mr Rowell’s business was, he was clearly carrying on a business. The Applicant contended that Mr Rowell had got his own ABN, had said to the world and to the government on the public record he was a sole trader and put an ad on Gumtree.[74]

    [74]    Transcript, page 127.

15. While Mr Rowell did have an active advertisement for his services on Gumtree and had printed brochures of which he says he did not deliver and obtained an ABN, the Tribunal is not convinced that he was in fact carrying on his own business of providing music tuition.  Even if he had of, that would not necessarily have changed the relationship between him and the Applicant unless of course he was representing his own business while carrying out the lessons he was contracted by the Applicant to provide.

16. The evidence indicates that as previously mentioned the Applicant sourced the students, set the timetables, set the fees and collected them from the students, entered into a separate contractual relationship with the students in which terms and conditions were outlined and obligations were created between the students and the Applicant, it was the Applicant who owed a duty of care to the students. Both Mr and Mrs Storer’s evidence indicated that Mr Rowell was seen by the students and their parents to have been one of their teachers. They provided him with a company logo t-shirt and referred to him in that manner – which clearly demonstrates this fact. 

17. When considering the contractual obligations between the Applicant and the students (often as represented by their parents), that all lessons were held on the Applicant’s premises, that the Applicant was responsible for ensuring the lessons were delivered, the Tribunal finds that this indicia weighs heavily towards the relationship in question being one of employment. Mr Rowell was required to attend when he was told to and to teach the lessons scheduled during that time. Mr Rowell was held out by the Applicant as being one of its teachers.

18. There was no evidence advanced before the Tribunal that indicated that Mr Rowell was in anyway providing his services on his own behalf rather than on behalf of the Applicant as the Forte School of Music at Morphett Vale or Black Forest. The Respondent contended that the Applicant set the price, kept the profit and was certainly much more than a mere commission agent or a booking agent for the teachers. The Tribunal agrees with that contention and considers it was clear that Mr Rowell was serving the Applicant in their business.

    Results

19. The results test requires consideration of whether the contract was to produce a particular result or provide a service. Where there is no discernible product created which is distinct from the labour that created it, this indicia may not be that helpful.[75]

    [75]    See On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3) [2011] FCA 366; (2011) 214 FCR 82 at [282].

20. In this regard the Respondent contended that:[76]

    The substance of Mr Rowell’s contract was not to produce a specified result as distinct from his labour, it was to teach for a specific period of time. Payment for the lesson was calculated by reference to the time taken for the lesson and was, in essence, payment for Mr Rowell’s labour. If a student missed their class (without notice) Mr Rowell was sometimes paid despite not delivering any tuition.

    [76]Exhibit 3, Respondent’s Outline of Argument, page 7, paragraph 28.

21. The Applicant on the other hand contended that the completion of a music lesson by Mr Rowell was the fulfillment of the Applicant’s desired result or in the alternative the Applicant’s desired result was for the particular body of students who sought tuition in an other instrument, in any given term, to receive the that tuition over the course of that term.[77]

    [77]    Exhibit 1, Joint Hearing Book, Applicant’s Amended Statement of Facts, Issues and Contention, page     165, paragraphs 36-37.

22. The Tribunal’s view is that there is no discernible product created or clear distinction between the service provided and result, and as such finds that this indica does not assist in determining the relationship between Mr Rowell and the Applicant.

    Delegation

23. The indicia of delegation was the most contested indicia in this matter. It was agreed by Mr and Mrs Storer and Mr Rowell that he was rarely absent during the Relevant Period and where he was unable to attend a scheduled lesson it was rescheduled for him or on some occasions he rescheduled it himself. It was agreed that Mr Rowell at no stage sought to delegate his lessons to someone else.

24. The main disagreement between the parties is that the Applicant contended that whether or not Mr Rowell was aware he could delegate his work to someone else he had the right to do so and that this right was apparent in the terms of his engagement. The Respondent on the other hand contended that Mr Rowell did not have the ability to sub-contract.

25. In his evidence Mr Rowell indicated that he did not believe that he could organise his work or tasks to be completed by another person engaged by him either with or without the approval of the Applicant. He wrote on the Superannuation Guarantee Questionnaire that he was “unsure to as the exact details of these situations, as no information on the actual policies of the business was ever made known to us ….”[78] Mr Rowell’s evidence which was supported by that provided by Mrs Storer was that he was verbally told that he was to complete the teaching himself. Mr Rowell further provided in the Questionnaire in relation to absences that “Once again this would vary on any given incident, however generally if the employee was unable to attend a day of work, they would notify the employer, and the work would either be assigned to another employee at the discretion of the employer, or if no substitute could be arrange, would be completed by the original employee at an alternative time arranged by the business, the employer, as well as the student/customer.”[79]

    [78]Exhibit 1, Joint Hearing Book, T Documents, T4, page 53, Superannuation Guarantee – Status of the     Worker Questionnaire – Worker/Payee.

    [79]Exhibit 1, Joint Hearing Book, T Documents, T4, page 53, Superannuation Guarantee – Status of the     Worker Questionnaire – Worker/Payee.

26. The Tribunal considers that Mr Rowell’s evidence in his witness statement and at Hearing was consistent. While the Applicant submitted that Mr Rowell was vague in his evidence and changed his position, the Tribunal considers that Mr Rowell was unwavering in his evidence that he at no stage understood based on what he had experienced and seen while working for the Applicant during the Relevant Period and in the absence of any direct conversations or information on the issue from Mr or Mrs Storer, that he could have either with or without their approval arranged for someone else to come in and teach his lessons.

27. The examples provided by Mr Rowell in his evidence about times when delegation or substitution of teachers occurred related to two separate occasions where he had been asked by Mrs Storer to step in for another teacher, once to fill in for the teacher who was leaving and from whom Mr Rowell took over from and once where he filled in for another teacher later in his engagement with the Applicant at the request of Mrs Storer. On both occasions Mr Rowell said that the arrangements were made by Mrs Storer and he was paid by the Applicant not by the other teacher. The other example referred to by both Mr Rowell and Mr and Mrs Storer related to a drum teacher who was going to be away for at least a month, Mr Rowell gave evidence which was not effectively disputed that on that occasion he made a recommendation for an alternative teacher to Mrs Storer who then contacted that person and she was then engaged to take the drum lessons and was paid by the Applicant not the drum teacher for whom she was filling in.

28. Mr and Mrs Storer gave evidence that although Mr Rowell had the ability to delegate his work, he never chooses to. It was suggested that this was because he needed the money and preferred for his lessons to be rescheduled. Mr and Mrs Storer gave evidence that they would want to at least know who would be engaged as a subcontractor by Mr Rowell as their business involves teaching young children and they have child safety to consider.  When pushed they also provided evidence that they would want to know that the subcontractor was capable of providing the lesson.

29. The issue of the Applicant wanting to ensure that child safety was a primary consideration when allowing a teacher to take a lesson is reasonable. However, given the evidence provided that Mr Rowell was not required to have a police check until well after being engaged by the Applicant and Mrs Storer’s evidence that they require teachers to have checks done before starting however often have to continually follow them up, detracts from the weight that the Tribunal places on child safety being a primary reason for the Applicant wanting to approve any sub-contracted teachers rather than Mr Rowell not actually having the ability to sub-contract.

30. The Applicant contended that the evidence in relation to delegation is that clearly the express written terms of the contract did not deal with delegation nor were there any verbal terms. Mr Rowell admitted that there had never been any discussion in which he was told he could not delegate. He was also not told he could not subcontract to another teacher on whatever terms he and that other teacher might have agreed.[80]

    [80]    Transcript, page 123.

31. The Applicant contended that without more than a simple contract that A engages B on a contract basis one would infer a right to delegate from contractual terms of that nature. The Applicant provided by way of an example if a factory has many employees, but out the front of the factory it has a large strip of lawn and it enters into a simple contract with a lawn mowing person to mow that law and says “I am engaging you on a contract basis” it is submitted that it would go without saying that the contractor, B could in turn subcontract the task, as long as he gets it done. So without more, the statement or the agreement between A and B that A has engage B on a contract basis must carry with it an implied term that B, in turn, can subcontract. It would only be otherwise if there was some express term precluding that.

32. Based on that example the Applicant contended that Mr Rowell had an implied right to subcontract, whether he knew it or not and it is irrelevant whether he understood he had that right. The Applicant contended it is true that the Applicant might have wanted to have had some say in the identity of the delegate, or the subcontracted party, and the obvious example of that may be that party’s appropriateness to work with children.[81]

    [81]    Transcript, page 124.

1. The Tribunal considers this example provided by the Applicant to be flawed. The example situation is not comparable to that in question here. The Tribunal agrees that A would not be engaged with how the lawn mowing was completed, rather it was the result of the lawn actually being mowed that was important. The lawn mowing situation does not involve the provision of service by B to another person on behalf of or in connection with A, it is a situation where B is providing a service directly to A. In the present situation Mr Rowell is providing a service on behalf of the Applicant, assisting it to meet its contractual obligations to its students (and their parents).

2. The Applicant contended that in relation to the identity of the worker, in this case it was virtually immaterial and the evidence bears that out powerfully. The fact that Mr Rowell who when engaged had almost no experience in the relevant field shows how unimportant it was for the Applicant to have that particular person, as opposed to any person, do the job.[82]

   [82]    Transcript, page 126.

3. The Respondent contended that the identity of the worker mattered and provided that:[83] 

   Both Mr and Ms Storer accepted without hesitation that the relationship between the teacher and the student was an important part of the teaching environment. Both of them accepted that the expectation was that the teacher would teach out the term and both of them accepted that parents would be disappointed if their child’s teacher were to change frequently.

   So, this reality really dispenses with the delegation issue as a real indicia of concern in this matter.  It’s just not the kind of work where Mr Rowell could at his discretion simply arrange for anyone to turn up and do the job. It’s not tiling, it involves an existing relationship.  Now, true it is that when he was taken on, he was relatively inexperienced but it was accepted that he performed his work to a generally good standard and even if it were accepted that he was able, although he didn’t know it, to substitute another person at his own instigation, this is not a case where he had a right to delegate in the relevant sense.

   [83]    Transcript, page 140.

4. The Tribunal agrees with the contention of the Respondent that the identity of the worker did matter. The evidence before the Tribunal was unanimous that it was important that the teacher builds rapport with the student and that this assists the learning process and the satisfaction of the parents. It is unreasonable to suggest that it was open to Mr Rowell to arrange for different people at any stage, let alone different people to regularly undertake his lessons given that lessons were ordinarily provided to children, some whom have siblings engaged in other lessons with the Applicant, the evidence was clear that the Applicant’s main objective in offering the other instrument lessons was to keep the parents happy.

5. The Tribunal accepts that Mr Rowell had limited experience when he was engaged by the Applicant and that in reality at that stage it was immaterial to the Applicant whether it was Mr Rowell or another person who could teach guitar that they engaged, however once he had passed the trial stage that position changed, the Applicant required consistency for the students.

6. The evidence showed that the Applicant had a contractual obligation to ensure that the lessons that the student (or their parents on their behalf) had paid for in advance were provided to them. This was not the obligation of Mr Rowell.

7. Despite Mr and Mrs Storer giving evidence that Mr Rowell was able to delegate his work with their approval and the Applicant contending that such a right was implied into the engagement arrangements, the Tribunal considers that the reality of the relationship between the Applicant and Mr Rowell was that it was Mr Rowell who was required to deliver the lessons himself. The relationship was one for Mr Rowell’s services and required Mr Rowell not someone else to provide those services.

8. There was no evidence advanced by the Applicant of any examples of other instrument teachers engaging in a subcontracting/delegation arrangement. The Tribunal was not convinced when looking at the evidence provided by Mr and Mrs Storer in totality and the processes undertaken when rearranging lessons, that Mr Rowell ever had a true ability to delegate his work.

9. On weighing the evidence before it, the Tribunal considers that this indicia favours the existence of an employment relationship.

   Risk

10. The questionnaires competed by Mrs Storer and Mr Rowell both express that Mr Rowell did not guarantee his work, nor was he responsible for any mistakes he may have made. The risk for Mr Rowell appears to be limited to if students did not re-enrol, he would not have that particular lesson scheduled for the next term. However, given that the remuneration provided to Mr Rowell in relation to the lessons were much less than that provided to the Applicant, which when combined with the potential impacts of students or their families returning for piano/keyboard lessons or lessons, the commercial risk lies more fairly with the Applicant.

11. Consequently, the Tribunal considers that this indicia is more consistent with the existence of an employment relationship.

    Tools and Equipment

12. The evidence before the Tribunal is that the Applicant either personally or by requiring the student to acquire their own resources provided everything that Mr Rowell needed to teach his lessons. Mr and Mrs Storer both gave evidence of the facilities available at each of the Applicant’s schools which included the availability of books for parents or students to purchase, computers or ipads, instruments, backing material and amplifiers and leads. Mrs Storer’s evidence was that students predominately bought their own guitar and there was also a guitar available in the relevant room. 

13. Mr Rowell’s evidence was that he was provided with everything he needed by the Applicant.  Although he liked to use his personal guitar he did not always do so and on those occasion used the guitar on the Applicant’s premises. Mr Rowell told the Tribunal that in some instances he would source his own teaching materials in accordance with a students interest, however that did not seem to be the norm.

14. Based on the evidence before it, the Tribunal does not accept the Applicant’s contentions that Mr Rowell provided all of his own tools and equipment required to teach his lessons. The Tribunal considers that this indicia points to a relationship of employment.

    Rational for different arrangements with different workers

15. The Applicant drew the Tribunal’s attention to the decision of MWWD v Commissioner of Taxation [2020] AATA 4169 (MWWD) and asked that the Tribunal have particular regard to it. The Applicant contended that:[84]

    …. It is a fairly recent decision… that usefully draws together the concepts and it – it has a couple of important parallels with this case. … it’s accepted that the distinction between employee on the one hand and independent contractor on the other is, so the authorities say, rooted fundamentally in the difference between a person who serves the employer in the employer’s business, as opposed to a person who carries on a business of their own, and that is a crucial distinction, of course, that pervades the authorities.

    [84]    Transcript, page 127.

16. The Respondent contended that the facts in MWWD were different from the present case as in that case there was a clear rationale for engaging two different lessons of staff to do the same work, which does not exist in the present case. Further the Tribunal’s findings in relation to the intention of the worker, an experienced mechanic, who was entering into the relationship with his eyes wide open having received advice from his accountant as indicating that the terms of the contract and what was intended by the parties had a solid foundation.[85]

    [85]    Transcript, pages 143-144.

17. The Tribunal accepts that the legal principles set out by Deputy President McCabe in MWWD are instructive and that the reasons for decision draw those legal principles together in regard to the specific facts of that case. The Tribunal considers that its reasons for decision in this matter are not inconsistent with the legal principles set out in MWWD or other relevant Court and Tribunal decisions.

18. To that regard the Tribunal notes that the Applicant has at all times been clear that it operates a music tuition business and its core operations comprise teaching music (principally piano and keyboards) to children via a set of curriculum devised by specialist music educators (using the Forte Method) and that the teaching other instruments was a non-core part of the business.

19. Based on Mr Storer’s evidence the Applicant engages piano/keyboard teachers as employees as:

    ·He and Mrs Storer have the ability to supervise and train them due to their own expertise.

    ·These teachers are provided with training to equip them to teach the Forte Method.

    ·Teaching piano/keyboard is their core business.

    ·The remuneration is linked to the number of lessons they conduct and is determined on a term basis.

20. Mr Storer’s evidence in relation to why the Applicant engages other instrument teachers as contractors was because the teaching of other instruments was a non-core, adjunct activity of which he and Mrs Storer were unable to have any significant input into so they decided to out-source that aspect of the teaching operations of the Applicant’s business to external contractors.

21. Mr and Mrs Storers evidence was that the other instrument teachers engaged by the Applicant were all aged between 18 and 21 and in the case of Mr Rowell with no to little previous teaching experience. 

22. The Applicant contended that in this case there is clear division as shown in the employment contract for employees and the intensive training they are provided, whereas the adjunct people who teach other instruments get no training at all, and in fact do not even have to have any experience to get the job. There is a commercial and economic rationale for it. The Applicant contended that the Tribunal should be confident that the taxpayer has not been engaged in a nefarious attempt to undermine the rights of a select group of young, vulnerable people.[86]

    [86]    Transcript, page 129.

23. While the intention of Mr and Mrs Storer was that the Applicant would engage Mr Rowell as a contractor, as the instrument he taught was outside their expertise, overall when considering this argument as rational for classifying the relationship between the Applicant and the two different types of teachers differently is not persuasive. Mr and Mrs Storer are experienced musicians and were happy for the effective supervision of the delivery and quality control of other instrument lessons to be provided by the students and their parents, and as outlined above they exerted a level of control over the way in which Mr Rowell provided lessons. There is no suggestion that Mr Rowell or the other instrumental teachers were remunerated in a way that encouraged them to be more effective or that made working arrangements that were anything other than an employment arrangement attractive.

24. The Tribunal agrees with the submission of the Respondent that the present case is distinctly different to that of MWWD where there was a clear reason as to why the arrangements were different between the two classes of workers. Therefore, while the principles of the decision in MWWD apply, the overall outcome is dependent upon the facts of which are markedly different in the present situation.

    Conclusion

25. Having taken the approach of considering each indicia individually and together with an intuitive appreciation and assessment of the whole relationship, the Tribunal has formed the view that the relationship between Mr Rowell and the Applicant during the Relevant Period was one of employment.

    During the Relevant Period was Mr Rowell an employee of the Applicant within the extended definition of “employee” set out ins section 12(3) of the SGA Act?

26. As the Tribunal has found that Mr Rowell was an employee of the Applicant within the ordinary meaning of “employee” for the purposes of section 12(1) of the SGA Act, it is not required to consider the extended definition of employee.

27. However, for completeness the Tribunal notes that as expressed in paragraphs 25 to 26 above the Tribunal considers that the principles set out in Dental Corporation are relevant when considering whether the extended definition of “employee” set out in section 12(3) of the SGA Act is met. The Tribunal’s discussion in relation to the delegation and results indicia outlined above would be relevant in this regard.

    CONCLUSION

28. On balance, having considered the evidence before it, the Tribunal is not satisfied that Mr Rowell was an independent contractor.

29. The Tribunal finds that Mr Rowell was an “employee” in accordance with the ordinary meaning of the word pursuant to section 12(1) of the SGA Act and therefore was not required to consider the expanded meaning of “employee” pursuant to section 12(3) of the SGA Act.

30. The Applicant has not discharged its onus to prove that the assessments for the Relevant Period are excessive or otherwise incorrect. As a consequence of the Tribunal finding that Mr Rowell was an employee of the Applicant during the Relevant Period, superannuation guarantee payments were payable by the Applicant on Mr Rowell’s behalf.

31. In this matter the calculation of the superannuation guarantee charge for the Relevant Period is not in dispute. The Respondent submitted that should the Tribunal find that Mr Rowell was an employee of the Applicant, an order should be made that the Superannuation Guarantee Assessment for the quarter ended 31 March 2016 be amended in accordance with the new individual Superannuation Guarantee shortfall calculation provided at Annexure B to the Respondent’s Statement of Facts, Issues and Contentions. Such an order would correct the individual Superannuation Guarantee shortfall which will also require a recalculation of the nominal interest component. The need for such a correction has arisen as the assessment did not take into consideration the payment of $400.25 made to Mr Rowell by the Applicant on 4 March 2016.[87] The Applicant does not dispute this point.[88] The Tribunal accepts that it is appropriate for the objection decision to be varied in the proposed terms. 

    [87]    Exhibit 1, Joint Hearing Book, Respondent’s Statement of Facts, Issues and Contentions, page157-      159, paragraphs 89-90 and Annexure B.

    [88]    Transcript, pages 63-64.

    DECISION

32. The objection decision:

    (a)as it relates to the Superannuation Guarantee Assessment for the quarter ended 31 March 2016 is varied in accordance with the new Individual Superannuation Guarantee shortfall calculation provided at Annexure B to the Respondent’s Statement of Facts, Issues and Contentions; and

    (b)is otherwise affirmed.

I certify that the preceding 148 (one hundred and forty eight) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell

................[SGD]....................................................

Associate

Dated: 28 May 2021

Date of hearing:

29 and 30 April 2021

Counsel for the Applicant:

Solicitors for the Applicant:

Mr Anthony Hurren

JL Lawyers Pty Ltd

Counsel for the Respondent:

Mr Sam Ure

Solicitors for the Respondent:

Australian Taxation Office