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 86-35   Later payments of, or entitlements to, personal services income to be disregarded for income tax purposes  

86-35(1)    
To the extent that a payment by the *personal services entity, or by your *associate, is a payment to you or any of your associates of:

(a) *personal services income included in your assessable income under section 86-15 ; or

(b) any other amount that is attributable to that income;

the payment:

(c) is neither assessable income nor *exempt income of the entity receiving it; and

Note:

Subsection 118-20(4) prevents this income being treated as a capital gain.

(d) is not an amount that the entity making it can deduct.

Note:

Section 118-65 prevents this amount being treated as a capital loss.

Example:

Continuing example 2 in section 86-20 : Assume that NewIT had paid Jill, Ron's wife, an amount for work that is not the principal work of NewIT. The payment is made from money already included in Ron's assessable income under section 86-15 .

The amount is neither assessable income nor exempt income of Jill, and NewIT cannot deduct the amount.

86-35(2)    
To the extent that you are entitled, or any of your *associates are entitled, to a share of the net income of the *personal services entity, or of any of your associates, and that income is:

(a) *personal services income included in your assessable income under section 86-15 ; or

(b) any other amount that is attributable to that income;

that share is neither assessable income nor *exempt income of the entity receiving it or entitled to receive it.