ALMBCIt probably goes without saying for most people that superannuation is the sort of thing that you don't think about until you need it.
By definition, superannuation is the system in which employees spend years investing money to serve as a nest egg for their retirement. Designed to reduce mass reliance on a publicly funded pension system, it's something which can undoubtedly become messy when you begin to factor in the various types of employment, roles, and other methods under which one generates their income.
It's a topic which can get even messier once you bring it over to the arts industry, and in Australia, the start of the current financial year on July 1st brought with it new payday superannuation laws.
Indeed, from July 1st, these new laws mean that anyone who engages the services of musicians (whether it be performing, songwriting, etc.) is now required to pay them 12% superannuation within a seven day period.
On paper, this should be great news, meaning that musicians – who have been entitled to superannuation since 1992 – are able to put away funds for their eventual retirement.
However, the actuality is far from ideal.
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Last month, the ABC reported on the likes of the Newcastle Hunter Jazz Festival being forced to cancel its 2026 event, with organisers citing the impossibility of being able to navigate the logistics and resources of paying up to 330 musicians their owed superannuation in the allotted time.
Additionally, the Inverloch Jazz Festival also axed its planned 2026 edition, specifically citing the reason as being "due to new superannuation laws".
It doesn't stop there. The Australian Live Music Business Council (ALMBC) recently conducted a member survey, receiving over 100 responses from members in response to a request for stories, information, and ideas surrounding the nascent superannuation laws.
The responses were both worrying and all too common. Alongside confusion in regard to navigating this scenario, the difficulty of dealing with the logistics, and the financial strain such a requirement places upon people, some specifics were worrying.
Venue operators noted that that the ruling can add up to 50 hours of unpaid admin work each week, older musicians are having trouble understanding the system, some venue owners are citing unfeasibility as their reasoning behind no longer choosing to book sole trader bands, and a band leader has decided to retire from running professional bands.
In the case of the latter, the entirety of July resulted in more income lost thanks to cancelled gigs than 12% of super would have delivered in a whole year.
With work for musicians already vanishing, confusion surrounding who exactly is an employee, the disproportionately-high amount of additional admin hours needed, and the fact that this 12% of super will ultimately come out of musicians pockets as venues refuse to lift fees, it's a worrying situation, and one that needs addressing sooner rather than later.
Suggestions have been made in regard to how to fix this situation, including thresholds, calculating super on labour components instead of the gross fee, and allowing ABN holders to self-manage their super, but more is still to be done.
One person who is doing their best to ensure the problem is fixed is Kylie Thompson, the ALMBC's Treasurer, who has spent 28 years as a music industry accountant, is the founder of the music, creative & arts accounting firm Sorrento Strategic, and has worked with some of the biggest names in Australian music.
Speaking to The Music, Thompson outlined the situation affecting musicians as it stands, offers her own insight into the state of affairs, and explains why a $5,000 threshold is a “modest, targeted, evidence-based reform that would protect the grassroots end of the live music ecosystem”.
The Music: For the uninitiated, why are we talking about superannuation in the music industry at the current time?
Kylie Thompson: When the Superannuation Guarantee came in 1992, there's a special section in the act called Section 12, paragraph 8, which specifically includes super to be paid for musicians.
And it's a tricky one because most musicians would be running their own business and on an ABN, but this specific provision says even if you're running your own business as a sole trader on an ABN, if you actually are involved in performing music, you are deemed an employee for superannuation purposes.
So this is where all this latest drama has come from, and it is the fact that it's actually been in the law for 34 years. There was always an exemption for anyone that earned less than $450 in a calendar month. So I believe that's why the contemporary music industry was basically not aware of this special provision.
Under normal circumstances, most people running their own business are responsible for their own super, and the classic example used is an electrician or a plumber that comes to your house. They're running their own business and as if you're about to pay their super.
So on the 1st of July 2022, that minimum got basically dropped, and that meant that basically anyone paying a musician for a performance to a sole trader had an obligation to pay the super.
TM: When did you start seeing real examples that this could be causing concern for the industry?
KT: I was contacted virtually the next month by WA's Nanup Festival and [Director] Phaedra [Watts]. She basically had 100 acts lined up for the following March festival, heard about this and thought, "Gee, am I going to have some issues here? 'Cause I haven't even allowed for the super."
So this kind of triggered the conversation in WA. I then went out of my way to start running workshops to try and inform everyone that this wasn't new, but it's now come to the forefront because of this $450 threshold removal.
I've basically spent the last four years running workshops. I've gone from sort of being mainly WA-focused to really breaking out nationally. I've spent the last four years trying to educate the music industry that this is real, it's a thing, and you need to be dealing with this.
Now, four years later on July 1st, Pay Day Super has come in, and it's just kind of exacerbated the situation in the industry.
So, whereas maybe the industry wasn't really taking much notice of all of this or didn't think it applied to them, the collapse of the Newcastle Jazz Festival and the other festival has really kind of brought this to the fore. And there's been a lot of media about the fact that these two festivals were cancelled.
Realistically, what they've actually come out saying is that we haven't paid super for our musicians for the 37 years we've been going, even though there was a responsibility to do that. I don't want to hang them out to dry, but it's just to say that the cancellation of those two festivals in July has really brought the issue to a head.
I know that the larger bands have all been paying super for their musicians. John Butler's been my client all the way along since he was busking, so I can use John as an example.
We looked into this 20-something years ago when he went from busking to the Trio, and I researched it at the time and said, "We need to be paying these other guys super." So I do know for a fact that the larger bands, at the higher end of town, have all been paying super for years and years and years.
So really what's exacerbated this is the small level of town and the festivals and, and the not-for-profit festivals.
TM: It certainly feels like something that a lot of the industry seems to have been unaware of for quite some time. However, the recent ALMBC Member Survey outlined the situation and basically said, nobody argues against superannuation in principle, but claimed that the method is unworkable currently.
So, what's unworkable about the current method?
KT: I believe the real focus issue at the moment is the bands that operate via a band leader and their sole trader ABN. So that's where we've really got to differentiate here, it only applies to musicians who invoice under a sole trader ABN.
So if you're a band, you're in a partnership, or you operate in a family trust so you can employ yourself, or a company, none of this applies to you.
It's really the sole trader musicians, and unfortunately, it's a fact of our industry that there's always – usually in a band – the one person that's got their shit together. That's basically the organiser. They organise the gigs, they organise the rehearsals, they usually bank the gig money in their account and save it towards getting in the recording studio and going towards that first EP, or whatever. So it's this level of band that is one of the issues.
How I explained it in my ALMBC talk in June is, Kylie's got a band. Kylie invoices under Kylie's ABN. She's got a band of four people and she invoices, say, a festival $1,000 for a gig.
Now, the festival has the responsibility. They're paying a sole trader, ABN Kylie. They've got to put the $120 into Kylie's super fund. That's all that their responsibility is.
They can't give Kylie the $120 because Kylie might say, "You never paid that into my super fund" in two or three years' time. So all of a sudden, the festival's got to get Kylie's superannuation information and put the $120 in.
Then we turn around and Kylie originally – before we even knew about the super – used to get the $1,000 and distribute $250 each for four band members. She might have actually said $1,100, took $100 for organising it, and then turned around and said, "Okay, here you three guys. Here's your $250. Easy as. No super."
In this situation now, Kylie's got the $120 into super (which realistically should've been $30 each, because we think of ourselves as a band, and I'm just the band leader organising this), and all of a sudden she's got to make the decision: 'Do I take the $30 out of their $250? Or do I take it out of my $250?"
But at the end of the day, I'm out of pocket if I pay their $90 super, and I've got $120 in super and I'm 20 years of age, and I'm like, "I don't need that for 40 years."
So it's really totally unworkable, but that is the situation, and that is the situation that's been in the whole way along. But no one's really focused on it. So that's one huge area that's a drama.
So the easy way out of that is to go and form a band partnership. That's dangerous for anyone to say that, because a partnership is joint and severally liable for the liabilities of the band. So there's been so much misinformation online, and people are just going, "Go and get a partnership."
But that's a legal decision what you operate as. So that's one of the big issues there that's pretty much unworkable.
The other issue on looking at that issue is let's go back to Phaedra and her coming to me four years ago and saying, "Hey, I've got this festival, I've got 100 acts, and 70 of them have given me sole trader ABNs."
She had to go and basically get all of those 70 sole traders' ABN super information. She had a festival that got cancelled in March 2021 and 2022 because of COVID, and she's coming out the other side three years later having held onto her funding, but not factored in the 12% into anything.
So all of a sudden, that's got to come out of those artists' $250 of the $1,000.
Now adding to her annoyance is the fact that a lot of these people that do festivals – and that's happened with this jazz festival – might give you a Statement Of Supplier form, a hobby form. So they're saying, "Hey, we just do this as a hobby."
In WA, for example, I might have a whole contingent of muso clients that are FIFO guys in their 50s. This is just something they love to do on their roster back. And we just got total confirmation from the ATO Deputy Commissioner of Taxation that super is payable on Statement Of Supplier forms.
So the big issues are one, the band leaders that operate under a sole trader, and two, the hobby musicians that don't even want the super.
TM: There's a lot of intricacies at play there, but that's also just the lower end of town, right?
KT: That’s right. We recently had Stephen Wade from Select Music on [a panel] and he's one of the biggest booking agents in Australia. He brought up an example that he's got a sole trader musician act on one of his festivals that he's trying to book them in now.
They still operate as a sole trader, a $10,000 sole trader gig fee, his point is that as a booking agent they need clarity.
With the tax ruling, they put it out there for comment, and we actually did get our submission in to them saying, "We've got 107 responses here, and these are the main issues."
We put all these submissions in so that they get a feeling of us going, "You can say all of this stuff, but the music industry is a different kettle of fish." The music industry is just layers and layers of people all trying to make the most of everything, and there's not a lot of money to go around.
So Wade was trying to say, "This person that's actually made it that can now charge $10K for a festival line-up, they've got to get to the festival with a travel cost, they've got to pay their band members, and they've got the hire of the gear."
Do they go to the point with the $10,000, or break down their $10,000 so that you don't pay super on the cost? It's just not functional.
And there's a lot of confusion from people out there in the industry saying, "Well, I'm going to give an invoice that breaks down between the labour component of my sole trader performance, less all my costs."
Even that, to the point of the person making all the payments, you go back to a festival paying 100 acts, the administration side of it [is unworkable]. That's what happened to the Newcastle Jazz Festival. They said with 55 acts, 322 sole traders, we just couldn't handle this.
I've actually been on two or three festival not-for-profits as a treasurer and had the pain of obtaining the super details of all of these artists, and now what's exacerbated that with Pay Day Super is you gotta pay the super within seven days of paying them for the festival.
I'm saying to everyone that they can't get their gig fee unless you're holding their super details. There's an exemption if it's a new person you're dealing with that gives you until 20 days to pay the super, but realistically, with Pay Day Super, you should not be paying the gig fee without having the super details.
TM: We're seeing so many of these complaints, and we're seeing these cancellations, but what's the next step for businesses and festivals in these positions? How do they deal with it under the current conditions? Do they raise ticket prices, do they keep cancelling events? What's the next step?
KT: First things first, the festival cancellation is horrendous. Second thing, are all the festivals and the pubs gonna turn around and say, "We aren't dealing with sole trader acts [any more]"?
Unless something happens we're just not going to have a music industry. If you can't nurture the sole trader musicians and give them places to play, no one's ever going to discover them either, are they?
I spoke to a 22-year-old two days ago and she said, "Across the board in July, I have just lost 12% of all my gigs because of the ones that are doing the right thing, they're taking the 12% out of my $500. Then I've got to pay my band and pay their super."
The effect it's already had on the industry within five weeks, is all of these little sole trader guys have just lost 12% off the top by the people doing the right thing. Then they – the ones who want to do the right thing – now have to take 12% out of their band's money to put into super. How ridiculous is that for a 22-year-old starting out?
[Using data from my clients we determined that] the median average salary of a muso is $14,800. So how ridiculous to be now saying you got to put 12% of your income into super.
The, the 22-year-old says to me, "It should be my decision if I've got free cash to put into super, I'll put it in." She's sensible and she says, "I know I'll get a tax deduction for it if I put my super in, but that should be my choice."
But most of these kids starting out, they need to be saving that money. And as it is, this particular girl's got a $35K grant to go and record a first EP. But there's a second part of this section 12, paragraph 8 that refers to the recording of all music.
So that captures all the studios. Any small studios where the person operates as a sole trader, the artist is meant to pay 12% into their super.
TM: So suddenly that $35K that she's got is worth a lot less because she's having to pay her super out of that as well, right?
KT: Yeah, and that's the problem with these grant fundings if you're only just finding out now.
TM: The ALMBC Member Survey was put together as a way to source real life examples and ultimately present these along with suggestions on how to amend this new approach to Pay Day Super. But what are some of the suggestions you're putting forward?
KT: If we brought this threshold in that says if we've got a performance fee of $5,000 or less, and you fall in the category of a sole trader musician under that 1992 act, then this does not apply to you; super does not apply.
They're going on about, "We can't change laws, we can't do this." Well, they certainly did it within four weeks for JobKeeper, didn't they? When the industry was on its knees?
To me, the industry is on its knees again with this. If you're canceling festivals with 322 artists, and add in events like Bluesfest getting canceled, how are we going to survive if all of a sudden you're taking 12% off the low end of town?
If we brought this $5,000 minimum fee and then, we get some air time, and get some pressure on them, it is possible for them to… the Tax Office is saying they can't change the law.
We'll have to speak to the treasury. We got a seat at the table with the treasury last week, and then there were five politicians there. You have to all go out to your politicians, and the heat's got to go up.
But I've put a lot of thought into this. People are saying, "They're one-off gigs. Why do we want to tamper with putting money in their super?" You also got tax file numbers and date of births floating around in the music industry.
But to me, you can't put a value out there, you can't say "any more than up to 10 gigs" or anything, because people would manipulate that. A pub would say, "I'm going to give you nine gigs." They'll instantly start finding the loopholes or the ways around it.
If you said $1,000 a gig, all of a sudden every pub in Australia would cap the gigs for the musos in the corner at $1,000.
The $5,000 figure, I've put a lot of thought into it, because I figure that's the level that someone realistically should be operating as a partnership company or trust. If you can pull $5,000 a gig, then you've got to go next level and pay everyone else's super.
Alongside her suggestions, Thompson also urges musicians to employ the services of an accountant or a bookkeeper to assuage the stresses involved in this nascent Pay Day Super obligation.
A full list of suggestions put forward by Thompson and the ALMBC – including age and hobbyist exemptions, self-managed super, and a free clearing house – are available on the ALMBC's website, along with details of their Member Survey outcomes, their request to the Australian Tax Office, and more.
Anyone with concerns in regard to how this may affect the Australian music industry – regardless of whether they are musicians, part of the industry, or simply a fan – are urged to contact their local representative to express their opinions on Pay Day Super for musicians.
This piece of content has been assisted by the Australian Government through Music Australia and Creative Australia, its arts funding and advisory body
