Trustee for the Kitchen Unit Trust and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered a dispute between the Trustee for the Kitchen Unit Trust and the Commissioner of Taxation concerning superannuation guarantee charge liabilities. The core of the disagreement was whether a worker, Mr Novak, was an employee or an independent contractor for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA). The Trustee bore the onus of proving that Mr Novak was not an employee and that the assessment of superannuation guarantee charge was excessive or incorrect.

The Tribunal was required to determine whether Mr Novak was an employee of the Trustee within the ordinary meaning of that term as defined in section 12 of the SGAA. This involved assessing the nature of the relationship between the Trustee and Mr Novak, particularly in light of the absence of a written agreement comprehensively regulating their arrangement. The Tribunal also needed to consider the principles established in recent High Court decisions, specifically *Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd* and *ZG Operations Australia Pty Ltd v Jamsek*, regarding the characterisation of employment relationships.

The Tribunal reasoned that the determination of whether a person is an employee or an independent contractor, in the absence of a written contract, proceeds by reference to the rights and obligations of the parties under their contract, considering the totality of the relationship. It applied the principle that for an aspect of the relationship to bear upon the characterisation, it must relate to the contractual obligations, not merely how the relationship played out in practice without a necessary connection to those obligations. The Tribunal found that the Trustee had not discharged its burden of proving that Mr Novak was not an employee.

Consequently, the Tribunal affirmed the Commissioner's decision to disallow the objection. This meant that Mr Novak was found to be an employee under section 12(3) of the SGAA, and the Trustee was liable to make superannuation contributions in respect of payments made to him.