In late July 2024, the AAT held that pursuant to the Superannuation Guarantee (Administration) Act 1992 ("SG Act"), jockeys who raced at tracks owned by five race clubs between the period of 2009 to 2014 were employees of the clubs. The AAT found that due to a lack of evidence raised by the clubs, section 12(3) of the SG Act did not apply and s12(8) was the more appropriate provision to apply.
These matters was heard in five separate cases where the AAT found that all the race club taxpayers were employers of the jockeys for the purpose of the SG Act. These cases include:
- Armidale Jockey Club v FCT [2024] AATA 2726;
- Australian Turf Club Ltd v FCT [2024] AATA 2728;
- Clarence River Jockey Club Ltd v FCT [2024] AATA 2729;
- Grenfell Jockey Club Limited v FCT [2024] AATA 2730;
- Illawarra Turf Club Ltd v FCT [2024] AATA 2727.
Given that prior to 2014, the construction of some State's local rules of racing implicated that the race clubs are employers of jockeys, these lines of cases are important in understanding whether race clubs are liable for any superannuation payments to jockeys prior to 2014.
Facts
The taxpayers in these cases were horse racing clubs operating in NSW. For the 2009 to 2014 financial years, the jockeys of the race horse owners were paid a fee by the clubs in accordance with the NSW local racing rule under LR72. LR72, prior to 2014, stated the following:
Clubs shall pay such fee for a jockey or apprentice jockey in consideration for their riding a horse in a race or a barrier trial as may be set from time to time by the Board ...
The ATO contended that the clubs were obligated to make super contributions in relation to the fees paid by the jockeys as they would have been caught under s12(8) of the SG Act. S12(8) relevantly provides:
The following are employees for the purposes of this Act:
A person who is paid to perform or present, or to participate in the performance or presentation of, any music, play, dance, entertainment, sport, display or promotional activity or any similar activity involving the exercise of intellectual, artistic, musical, physical or other personal skills is an employee of the person liable to make payment.
The clubs argued that the jockeys were not their employees for two reasons. First is that section 12(3) should apply as they had a contract principally for their labour with the race horse owners and second, they were not liable to pay the fees as they merely did it on behalf of the race horse owners and were not liable to make payments to the jockeys under LR72.
Decision
Issue 1 – Section 12(3) – Was there a contract that was wholly or principally for the labour of the jockeys?
The AAT found that the race clubs had failed to discharge their burden of proof that the jockeys were the employees of the race horse owners. The clubs had failed to present any substantive evidence which indicated that there was a contract between the jockeys and the horse owners or who the parties were.
Further, the relationship between the jockeys and race horse owners was more akin to a joint venture where there was little scope for control beyond a set of tactical instructions relayed to the jockey before the race. Once the race commenced, the jockey had full agency on how the race would be run. As such, the AAT inferred that the jockeys were contracted to produce a result rather than for their labour.
Issue 2 – Section 12(8) – Were the clubs liable to pay the fees to the jockeys?
The crux of this issue was whether the clubs were liable to pay the fees to the jockeys. As noted beforehand, LR72 provided that it was the clubs which were liable to pay the fees to the jockeys. The clubs contended that LR72 provided an administrative mechanism whereby moneys held by the race clubs were paid to the jockeys on behalf of the owner or trainer for the benefit of the owner or trainers, in discharge of a liability of the owner or trainer.
However the AAT found that there was no express reference in LR72 to payments being made on behalf of someone else. The Tribunal found that the clubs had attempted to import words into LR72 to the effect that they made the payments on behalf of the race horse owners or trainers. The Tribunal found that the interpretation of the clubs flew in the face of the clear plain language of the rule and section. The plain language of LR72 indicated that liability rested solely with the clubs to make the fee payments to jockeys that raced.
This is interesting due to the fact that there is no strict time limit for the ATO to pursue superannuation claims. Given that some State's respective rules of racing were only modified in 2014 due to the issue outlined above, then any racing club who failed to pay superannuation and were liable to pay under their respective rules of racing may be liable.
This is a considerable issue in Victoria as prior to July 2014, LR32 of Victoria's local rules of racing stated the following:
Racing Clubs must pay the fees as published in the Prescribed Fee Schedule to Jockeys and riders in consideration for their riding in races conducted by the Club.
The construction of the above clause indicates that much like NSW's old LR72, the clubs are liable to make the fee payments to the jockeys for riding in the races and would be caught under section 12(8) of the SG Act. As such, given that there is no prescribed time limit in which the ATO can stop pursuing superannuation claims, clubs in Victoria may be liable for their failure to make any superannuation payments to jockeys prior to 2014. A further discussion on possible consequences of failing to meet superannuation obligations may be found here.
Takeaway
These line of cases are an important reminder of the extended meaning of employee for Superannuation purposes, a mere common law employee may be caught under this extended meaning. Further, it highlights that in the context of any sport, entertainment or promotional activity, liability for superannuation rests on whoever is liable to make payments. Clubs should then consider auditing past payments and ensuring that they are in compliance with their superannuation obligations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
