Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-42 - PERSONAL SERVICES INCOME  

Division 87 - Personal services businesses  

Subdivision 87-A - General  

SECTION 87-15   What is a personal services business?  

87-15(1)    
An individual or *personal services entity conducts a personal services business if:

(a) for an individual - a *personal services business determination is in force relating to the individual ' s *personal services income; or

(b) for a personal services entity - a personal services business determination is in force relating to an individual whose personal services income is included in the entity ' s *ordinary income or *statutory income; or

(c) in any case - the individual or entity meets at least one of the 4 *personal services business tests in the income year for which the question whether the individual or entity is conducting a personal services business is in issue.

Note 1:

For personal services business determinations, see Subdivision 87-B .

Note 2:

Under subsection (3), the personal services business tests, apart from the results test under section 87-18 , do not apply if 80% or more of your personal services income is from one source (but they can still be used in deciding whether to make a personal services business determination).

87-15(2)    
The 4 personal services business tests are:

(a) the results test under section 87-18 ; and

(b) the unrelated clients test under section 87-20 ; and

(c) the employment test under section 87-25 ; and

(d) the business premises test under section 87-30 .

87-15(3)    

However, if 80% or more of an individual ' s *personal services income (not including income referred to in subsection (4)) during an income year is income from the same entity (or one entity and its *associates), and:

(a) the individual ' s personal services income is not included in a *personal services entity ' s *ordinary income or *statutory income during an income year, and the individual does not meet the results test under section 87-18 in that income year; or

(b) the individual ' s personal services income is included in a personal services entity ' s ordinary income or statutory income during an income year, and the entity does not, in relation to the individual, meet the results test under section 87-18 in that income year;

the individual ' s personal services income is not taken to be from conducting a *personal services business unless:

(c) when the personal services income is gained or produced, a *personal services business determination is in force relating to the individual ' s personal services income; and

(d) if the determination was made on the application of a personal services entity - the individual ' s personal services income is income from the entity conducting the personal services business.

Note:

Sections 87-35 and 87-40 affect the operation of subsection (3) in relation to Australian government agencies and certain agents.

87-15(4)    

Subsection (3) does not apply to income:

(a) that the individual receives as an employee; or

(b) that the individual receives as an individual referred to in paragraph 12-45(1)(a) , (b), (c), (d) or (e) (payments to office holders) in Schedule 1 to the Taxation Administration Act 1953 ; or

(c) to the extent that it is a payment referred to in section 12-47 (payments to *religious practitioners) in that Schedule.