Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 87.40

Object of this section

  (1)   The object of this section is to modify the operation of this Division for * agents who bear entrepreneurial risk in the way they provide services.

Agent rules do not apply

  (1A)   The rules in section   960 - 105 (Certain entities treated as agents) do not apply to this section.

Agents covered by this section

  (2)   Subsection   87 - 15(3) and section   87 - 20 apply, in the manner specified in this section, to an individual or * personal services entity if:

  (a)   the individual or personal services entity is an * agent of another entity (the principal ) but not the principal's employee; and

  (b)   the agent receives income from the principal that is for services that the agent provides to other entities ( customers ) on the principal's behalf; and

  (c)   at least 75% of that income is commissions, or fees, based on the agent's performance in providing services to the customers on the principal's behalf; and

  (d)   the agent actively seeks other entities to whom the agent could provide services on the principal's behalf; and

  (e)   the agent does not provide any services to the customers, on the principal's behalf, using premises:

  (i)   that the principal or an * associate of the principal owns; or

  (ii)   in which the principal or an associate of the principal has a leasehold interest;

    unless the agent uses the premises under an arrangement entered into at * arm's length.

Whether personal services income is from one source

  (3)   If the * agent is an individual, in applying subsection   87 - 15(3) to the * personal services income of the agent during an income year, any part of the agent's personal services income from the principal that:

  (a)   the agent gains or produces during the income year; and

  (b)   is for services that the agent provided to a customer on the principal's behalf in the income year or an earlier income year;

is treated as if it were personal services income from the customer, and not personal services income from the principal.

  (4)   If the * agent is a * personal services entity, in applying subsection   87 - 15(3) to an individual's * personal services income that is included in the entity's * ordinary income or * statutory income during an income year, any part of the individual's personal services income from the principal that:

  (a)   the agent gains or produces during the income year; and

  (b)   is for services that the individual or the agent provided to a customer on the principal's behalf in the income year or an earlier income year;

is treated as if it were personal services income from the customer, and not personal services income from the principal.

The unrelated clients test for a personal services business

  (5)   In determining whether, during an income year, the * agent meets the unrelated clients test under section   87 - 20, any services the agent provided in the income year or an earlier income year:

  (a)   for which the agent gains or produces, during the income year, personal services income from the principal; and

  (b)   that were provided to a customer on the principal's behalf;

are treated for the purposes of paragraph   87 - 20(1)(a) as if the agent, and not the principal, provided them to the customer.

Table of sections

87 - 60   Personal services business determinations for individuals

87 - 65   Personal services business determinations for personal services entities

87 - 70   Applying etc. for personal services business determinations

87 - 75   When personal services business determinations have effect

87 - 80   Revoking personal services business determinations

87 - 85   Review of decisions