Making a film is the ultimate act of creative collaboration. We know that filmmaking requires a whole crew of people: actors, directors, producers, production designers, editors, and more – all collaborating on the one vision.
And for all of these people working on the one film – they all need to be paid. On most productions crew are all full time, part time or casual employees, and this is the best way to engage crew. However, from time to time for various reasons a crew member may be engaged as a sole trader, and the question arises: does a crew member engaged as a sole trader also need to be paid superannuation?
At Above the Line Accounting, we’re here to clarify the latest rules from the ATO and ensure your film doesn’t run into any payroll or accounting issues. This blog clarifies who needs to be paid superannuation.
First up: why is everyone confused?
For several years, there was a misconception that sole traders were always contractors and didn’t need to be paid superannuation. Case law and information from the ATO has clarified that this is not correct, and that sole traders are eligible for superannuation when performing the role similar to that of an employee.
Note that if you engage a company rather than an individual as an employee or sole trader, then there is no superannuation payable. This is because that company will then pay the individual, and it is that company’s responsibility to pay superannuation to the individual.
Today, the nature of the filmmaking process is that you are likely to have a superannuation obligation to pay the people who work on your film, regardless of whether they are an employee or a sole trader. The one grey area is for writers, which we’ll talk about in more detail further on.
What does this mean for productions?
This means that from the outset of a film’s production, producers must budget to pay their team super, whether an employee or a sole trader.
For every film, a production must:
Include super in the budget. Before production, the filmmaking budget needs to include an allocation for paying employee and sole traders their superannuation.
Note that all superannuation payments need to be made to a Superannuation Clearing House. You cannot pay a sole trader their superannuation directly. Some sole traders will put superannuation on their invoice, however you should not pay super to the sole trader, it must be paid to the Super Clearing House.
Get a copy of their super fund details. When hiring employees and sole traders, ensure you receive their super fund payment details to enable payment of their superannuation. Best practice is to get all employees and sole traders to complete a Superannuation Standard Choice Form.
We recommend saving these details into the accounting software Xero, which can manage this super payment for you. Helpfully, you can enter a sole trader in Xero’s payroll system and pay their Super through Xero. Xero acts as a Superannuation Clearing House, which how to make these payments legally in Australia.
Regularly pay your film crew their super. When you pay your contractors, ensure you also submit their super. Xero can automate this process once you’ve set up the details. Legally, superannuation payments must be paid quarterly at a minimum, however industry agreements can require monthly superannuation payments.
The friendly team at Above The Line Accounting can help if you need assistance setting up Xero.
What about film script writers?
As of May 2024, there are discussions around whether film script writers should be paid superannuation. This is an ongoing discussion with Screen Producers Australia (SPA).
The debate asks if a writer completes a script, whether they are being paid for services of writing or for the intellectual property rights to their script. If the latter, the debate is that they would not be paid superannuation.
It is made more complicated by the additional services that a writer might engage in, such as brainstorming meetings, workshops and read-throughs, which are services.
Until this is resolved with the ATO, producers and writers should have a clear contract to resolve any potential issues and seek legal advice.
Invoices
We see a lot of invoices from contractors that are a mixture of labour and equipment hire. Confirming that you only need to pay superannuation on the labour portion of the invoice.
In conclusion
Today, the guidance for film crews is clearer: productions are required to pay superannuation to employees and almost all sole traders who works on their film.
Once you’ve accounted for super payments in your film budget, tools like Xero accounting software streamline the payment process to ensure the payment for super goes straight into their super fund account through a Superannuation Clearing House.
At Above The Line Accounting, we’re here to help you every step of the way, including setting up your film budget, setting up Xero, and acting as a production accountant.
Feel free to contact our friendly team with any questions. We’d be delighted to look after the numbers so you can focus on getting your stories told. Book in for a free consultation call today.
A note on this article:
Information provided by the Above Line Accounting on this website is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice.