Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-42 - PERSONAL SERVICES INCOME  

Division 86 - Alienation of personal services income  

Subdivision 86-A - General  

SECTION 86-15   Effect of obtaining personal services income through a personal services entity  

Amounts included in your assessable income

86-15(1)    
Your assessable income includes an amount of *ordinary income or *statutory income of a *personal services entity that is your *personal services income.

Example:

Continuing example 1 in section 84-5 : Assume that NewIT only provides services to one client. Ron ' s assessable income includes ordinary income of NewIT from providing the computer programming services, because the income is Ron ' s personal services income.

Note:

The amount included in your assessable income can be reduced by certain deductions to which the personal services entity is entitled: see section 86-20 .

86-15(2)    
A personal services entity is a company, partnership or trust whose *ordinary income or *statutory income includes the *personal services income of one or more individuals.

Exception: personal services businesses

86-15(3)    
This section does not apply if that amount is income from the *personal services entity conducting a *personal services business.

Note:

Even if the entity is conducting a personal services business, it is possible that some of its income is not income from conducting that business.

Exception: amounts promptly paid to you as salary or wages

86-15(4)    
This section does not apply to the extent that:

(a) the *personal services entity pays that amount to you, as an employee, as salary or wages; and

(b) the payment is made before the end of the 14th day after the *PAYG payment period during which the amount became *ordinary income or *statutory income of the entity.

Note:

The entity is obliged to withhold amounts from salary or wages paid before the end of that day: see section 12-35 in Schedule 1 to the Taxation Administration Act 1953 .

Exception: exempt income etc.

86-15(5)    
This section only applies to the extent that that amount would be assessable income of the personal services entity if this Division did not apply.

Example:

If the entity ' s income includes an amount that is your personal services income for a service on which GST is payable, the amount included in your assessable income will not include the GST, because the GST is neither assessable income nor exempt income of the entity: see section 17-5 .