Employee test
Scenario：
I am a chairman of a medium-sized not for profit (NFP) organisation in the employment service industry. The NFP received conflicting advice regarding the need for our non-executive directors (NED) to be treated as employees. Please clarify the situation regarding the employment status of our NEDs and superannuation contribution obligations of the organisation.
Explanation:
In determining whether a NED is an employee of the company, the factors in taxation ruling TR 2005/16 and superannuation Guarantee ruling SGR 2005/1 should be considered. However, irrespective of whether or not a NED is a director of a company, both PAYG tax and superannuation may apply to the remuneration paid to the director (TAA 1953 Sch 12-40(1); SGAA s12(2)). That is, the issue of whether the NED is or is not an employee may have no impact on whether tax or superannuation applies. It will apply regardless.