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ATO Interpretative Decision

ATO ID 2015/24

Superannuation
Superannuation guarantee: work done outside Australia

Attention This document has changed over time. View its history.


CautionCAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Issue

Is work done at sea at a location which satisfies all of the following:

·
 it is outside the outer limits of the 'coastal sea' of Australia
·
 it is outside the outer limits of the 'coastal seas' of the Territories, including:
·
 the Coral Sea Islands Territory
·
 the Territory of Ashmore and Cartier Islands
·
 the Territory of Christmas Island
·
 the Territory of Cocos (Keeling) Islands, and
·
 the Territory of Heard Island and the McDonald Islands,
·
 it is outside the Offshore Areas including:
·
 an offshore area for the purpose of the Offshore Petroleum and Greenhouse Gas Storage Act 2006, and
·
 the Joint Petroleum Development Area (within the meaning of the Petroleum (Timor Sea Treaty) Act 2003) [JPDA],

'work done outside Australia' for the purpose of subsection 27(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?

Decision

Yes. Work done at sea at such a location is 'work done outside Australia' for the purpose of subsection 27(1) of the SGAA.

Facts

The employee is not a resident of Australia.

The employee is employed by a company which is not a resident of Australia.

The employee's work is done at sea more than 12 nautical miles from the territorial sea baseline of Australia, although still within the limits of Australia's continental shelf.

The employee's work is done at sea more than 12 nautical miles from the territorial sea baseline of following Territories:

·
 the Coral Sea Islands Territory
·
 the Territory of Ashmore and Cartier Islands
·
 the Territory of Christmas Island
·
 the Territory of Cocos (Keeling) Islands, and
·
 the Territory of Heard Island and the McDonald Islands.

The employee's work is not done in the JPDA or an offshore area for the purpose of the Offshore Petroleum and Greenhouse Gas Storage Act 2006.

The salary or wages paid to the employee do not relate to employment covered by a certificate under section 15C of the SGAA (concerning International Social Security Agreements).

Reasons for Decision

Subsection 27(1) of the SGAA provides that certain salary or wages are not to be taken into account for the purpose of making a calculation under section 19 of the SGAA (concerning individual superannuation guarantee shortfalls).

The expression 'work done outside Australia' is used in paragraphs 27(1)(b)(i) and 27(1)(c)(i) of the SGAA. Paragraph 27(1)(b)(i) of the SGAA relevantly refers to:

   (b) salary or wages paid to an employee

(i)
  who is not a resident of Australia for work done outside Australia (except to the extent that the salary or wages relate to employment covered by a certificate under section 15C);

What constitutes 'Australia' in the relevant context?

Under section 4 of the SGAA the application of that Act extends to every external Territory referred to in the definition of Australia. Australia, when used in a geographical sense, is defined in section 6(1) of the SGAA, as having the same meaning as in the Income Tax Assessment Act 1997 (ITAA 1997). The ITAA 1997, in section 960-505 defines Australia as:

    Territories

(1)
  Australia, when used in a geographical sense, includes each of the following:
(a)
  Norfolk Island;
(b)
  the Coral Sea Islands Territory;
(c)
  the Territory of Ashmore and Cartier Islands;
(d)
  the Territory of Christmas Island;
(e)
  the Territory of Cocos (Keeling) Islands;
(f)
  the Territory of Heard Island and the McDonald Islands.

    Offshore areas

(2)
  Australia, when used in a geographical sense, includes each of the following areas:
(a)
  an offshore area for the purpose of the Offshore Petroleum and Greenhouse Gas Storage Act 2006;
(b)
  the Joint Petroleum Development Area (within the meaning of the Petroleum (Timor Sea Treaty) Act 2003).

A note to the above definition in section 960-505 of the ITAA 1997 refers the reader to section 15B of the Acts Interpretation Act 1901 (AIA).

Subsection 15B(1) of the AIA provides:

   An Act is taken to have effect in, and in relation to, the coastal sea of Australia as if that coastal sea were part of Australia.

Subsection 15B(2) of the AIA provides:

   A reference in an Act to Australia, or to the Commonwealth, is taken to include a reference to the coastal sea of Australia.

Subsection 15B(3) of the AIA provides:

   An Act that is in force in an external Territory is taken to have effect in, and in relation to, the coastal sea of the Territory as if that coastal sea were part of the Territory.

Subsection 15B(3A) of the AIA provides:

   A reference in an Act to all or any of the external Territories (whether or not one or more particular Territories are referred to) is taken to include a reference to the coastal sea of any Territory to which the reference relates.

Accordingly, 'Australia' in the phrase 'work done outside Australia' as used in subsection 27(1) of the SGAA includes the coastal sea of Australia and the coastal sea of each of its Territories.

However note that, pursuant to sub-paragraphs 27(1)(b)(ii) and 27(1)(c)(ii) of the SGAA, when the work done in Norfolk Island is undertaken by an employee who is a resident of Norfolk Island or for an employer who is a resident of Norfolk Island, superannuation guarantee obligations will not apply in respect of salary or wages paid to the employee for that work.1

Meaning of 'coastal sea'

Paragraph 15B(4)(a) of the AIA provides that, in section 15B, 'coastal sea' in relation to Australia, means:

·
  the territorial sea of Australia, and
·
 the sea on the landward side of the territorial sea of Australia and not within the limits of a State or internal Territory,

and includes the airspace over, and the sea-bed and subsoil beneath, any such sea.

Similarly, paragraph 15B(4)(b) of the AIA provides that, in section 15B, 'coastal sea' in relation to an external Territory, means:

·
 the territorial sea adjacent to the Territory, and
·
 the sea on the landward side of the territorial sea adjacent to the Territory and not within the limits of the Territory,

and includes the airspace over, and the sea-bed and subsoil beneath, any such sea.

Section 2B of the AIA defines 'territorial sea' as having the same meaning as in the Seas and Submerged Lands Act 1973 (SSLA).

Subsection 3(1) of the SSLA, in part, defines 'territorial sea' as having the same meaning as in Articles 3 and 4 of the United Nations Convention on the Law of the Sea done at Montego Bay on 10 December 1982 (the Convention).

Articles 3 and 4 of Section 2 of Part II of the Convention (as contained in the Schedule to the SSLA) read respectively:

    Breadth of the territorial sea

   Every State has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from baselines determined in accordance with this Convention.

    Outer limit of the territorial sea

   The outer limit of the territorial sea is the line every point of which is at a distance from the nearest point of the baseline equal to the breadth of the territorial sea.

Consistent with the right set out in Article 3, and pursuant to a power to do so set out in section 7 of the SSLA, the Governor-General made a proclamation declaring the outer limit of the territorial sea to be 12 nautical miles seaward of that territorial sea baseline (see Proclamation in Gazette No. S 297, Tuesday 13 November 1990).

In some cases, the outer limit of the territorial sea is less than 12 nautical miles from the territorial sea baseline, due to the close proximity of two countries e.g. Australia and Papua New Guinea (Australian Treaty Series 1985 No 4 - Treaty between Australia and the Independent State of Papua New Guinea concerning Sovereignty and Maritime Boundaries in the area between the two Countries, including the area known as Torres Strait, and Related Matters).

Offshore areas

The extension of the definition of Australia in subsection 960-505(2) of the ITAA 1997, to the offshore areas of the JPDA and the offshore area for the purposes of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 provides that the SGAA has effect as if these offshore areas were part of Australia.

A note to the definition in section 960-505(2) indicates that the offshore areas include all things located in those areas, including all installations and structures such as oil and gas rigs. These areas also extend to the airspace over, and the sea-bed and subsoil beneath those areas.

However a further note to section 950-505(2), makes it clear that the offshore area and the JPDA include the exclusive economic zone and the continental shelf of Australia.

Paragraph 27(1)(ca) of the SGAA also states that when the work in the JPDA is undertaken by an employee who is not an Australian resident, superannuation guarantee obligations will not apply in respect of salary or wages paid to the employee for that work.

Conclusion

In the phrase 'work done outside Australia' as used in subsection 27(1) of the SGAA, 'Australia' is used in a geographical sense and extends to the outer limits of Australia's 'coastal sea'. Further, 'Australia' in that phrase also includes the territories of Norfolk Island, the Coral Sea Territory, the Territory of Ashmore and Cartier Islands, the Territory of Cocos (Keeling) Islands, the Territory of Christmas Island, the Territory of Heard Island and the McDonald Islands and the 'coastal sea' of each of those Territories. It also includes the offshore areas.

Work done outside those areas is 'work done outside of Australia' for the purposes of subsection 27(1) of the SGAA.

As a result, the salary or wages paid to the employee in this case is for 'work done outside of Australia' and so are not taken into account for the purpose of making a calculation under section 19 of the SGAA, due to the operation of paragraph 27(1)(b) of the SGAA.

Amendment History

Date of amendment Part Comment
19 February 2016 Offshore areas Clarified areas which are within Australia.
  Year(s) of income Updated financial year to '2016'.

[1]
1 Pursuant to Schedule 2 of the Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Act 2015 , from 1 July 2016 , superannuation guarantee obligations will apply in respect of salary or wages paid to an employee for work done in Norfolk Island. For application and transitional provisions see section 2 of Schedule 2 of the Tax and Superannuation Laws Amendment (Norfolk Island Reforms) Act 2015.


Date of decision: 29 July 2015

Year of income:For the financial year ending 30 June 2016 and later years

Legislative references:
Superannuation Guarantee (Administration) Act 1992
   section 4
   section 6
   section 15C
   section 19
   section 27
   subsection 27(1)
   paragraph 27(1)(b)
   paragraph 27(1)(c)
   paragraph 27(1)(ca)

Income Tax Assessment Act 1997
   section 995-1
   section 960-505

Acts Interpretation Act 1901
   section 15B
   subsection 15B(1)
   subsection 15B(2)
   subsection 15B(3)
   subsection 15B(3A)
   subsection 15B(4)
   paragraph 15B(4)(a)
   paragraph 15B(4)(b)

Petroleum (Timor Sea Treaty) Act 2003
   Schedule 1 Article 3
   Annex A under Article 3

Sea Installations Act 1987
   subsection 45(1)
   Schedule

Seas and Submerged Lands Act 1973
   subsection 3(1)
   section 7
   Schedule

Related Public Rulings (including Determinations)
Superannuation Guarantee Ruling SGR 2009/2

Related ATO Interpretative Decisions
ATO ID 2003/907
ATO ID 2010/46

ATO Interpretative Decisions overturned by this decision
ATO ID 2012/75

Other references
Explanatory Memorandum to the Petroleum (Timor Sea Treaty) (Consequential Amendments) Bill 2003
United Nations Convention on the Law of the Sea (Montego Bay, 10 December 1982)
Australian Treaty Series 1985 No 4 - Treaty between Australia and the Independent State of Papua New Guinea concerning Sovereignty and Maritime Boundaries in the area between the two Countries, including the area known as Torres Strait, and Related Matters
Proclamation in Gazette No. S 297, Tuesday 13 November 1990 - outer limit of territorial sea

Keywords
Australian offshore areas
Superannuation guarantee charge
Superannuation guarantee scheme

Siebel/TDMS reference number: 1-71DJQDR

Business line: Superannuation

Date of publication: 14 August 2015

ISSN: 1445-2782

ATO ID 2015/24 history   Top  
   Date   Version 
   14 August 2015   Original statement   
 You are here ®  19 February 2016   Updated statement   


 


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