Superannuation obligations for entertainers: What clubs and pubs need to know

Registered clubs and pubs have long been at the heart of Australia's entertainment industry, regularly engaging musicians, DJs, comedians, trivia hosts, bingo callers, MCs and other performers to attract patrons and enhance member experiences.

However, one area that continues to catch businesses by surprise is their Superannuation Guarantee (SG) obligations.

Many clubs and pubs assume that if an entertainer provides an Australian Business Number (ABN) and invoices as a contractor, superannuation is not payable. Unfortunately, that assumption may be incorrect and can lead to significant liabilities.

Why entertainers can be entitled to superannuation

Under the Superannuation Guarantee (Administration) Act 1992 (SGAA), the definition of an employee extends beyond a traditional employment relationship.

Section 12(8) of the SGAA specifically treats certain performers and entertainers as employees for SG purposes, even when they are engaged as independent contractors.

Australian Taxation Office (ATO) guidance confirms that individuals who are paid to perform or participate in music, entertainment, promotional activities or similar performances may be entitled to superannuation contributions from the business engaging them.

For clubs and pubs, this means SG obligations can arise in relation to a broad range of engagements, including:

• Solo musicians and bands
• DJs and karaoke hosts
• Comedians and entertainers
• Trivia, bingo and raffle callers
• MCs and promotional presenters
• Fitness and wellness instructors conducting classes on site.

The rules may extend beyond performers

Importantly, the SG rules do not necessarily stop with the performer.

The legislation also extends to individuals providing services "in connection with" a performance. The ATO has adopted a broad interpretation of this concept and, depending on the circumstances, certain support personnel may also fall within the SG regime.

This means businesses should not automatically assume that contractor arrangements associated with entertainment activities are outside the scope of superannuation obligations.

The potential cost of getting it wrong

Where SG has not been paid correctly, clubs and pubs may become liable for the Superannuation Guarantee Charge (SGC).

The SGC can include:

• Unpaid superannuation contributions
• Interest charges
• Administrative uplift amount.

Importantly, SG liabilities can be reviewed many years after the original engagement. Where the same arrangements have been used over an extended period, unpaid obligations can accumulate into a significant financial exposure.

The risk is particularly relevant for clubs and pubs because entertainment engagements are often recurring and relatively informal. A weekly musician, regular trivia host or monthly DJ may have been invoicing the venue for years without anyone assessing whether SG obligations apply.

In many cases, these payments are processed through accounts payable rather than payroll, which can make potential compliance issues harder to identify.

The Payday Super obligations which require employers to pay SG within seven days of paying salary, also apply to contractor payments involving entertainers and performers.

Managing SG risk in your venue

There are practical steps clubs and pubs can take to reduce their exposure.

Organisations should consider:

• Reviewing contractor arrangements involving entertainers and performers
• Identifying individuals engaged directly in their personal capacity
• Assessing whether the extended SG provisions apply
• Updating contractor onboarding procedures to capture information required for SG determinations
• Updating accounts payable procedures to align with Payday super obligations
• Periodically reviewing recurring entertainment engagements to ensure continued compliance.

These reviews are becoming increasingly important as regulatory scrutiny of SG obligations continues to increase and employers face greater visibility of their compliance obligations.

A governance issue, not just a payroll issue

Entertainment plays a vital role in attracting patrons and delivering memorable experiences for members and guests. However, ensuring the correct superannuation treatment of entertainers should now be viewed as an important governance and compliance consideration for clubs and pubs.

Taking a proactive approach today may help avoid significant and unexpected SG liabilities in the future.

How BDO can help

BDO works with clubs, pubs and other organisations across the Tourism, Hospitality and Leisure sector to assess contractor arrangements, manage employment tax risks and support compliance with Superannuation Guarantee obligations.

To discuss your organisation's SG obligations or arrange a review of existing entertainment engagements, contact your local BDO expert.