Case: Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248
Outcome: followed
being so, the "results test" then falls to be answered. That test is found in s 87 - 18 of the ITAA 1997. In IRG Technical Services Pty Ltd v Commissioner of Taxation [2007] FCA 1867 ; (2007) 165 FCR 57 at 70, [36] , Allsop J (as his Honour then was) observed of that section that its elements "were to be understood against the background of the jurisprudence concerning independent contractors". In so doing, his Honour referred with approval to an earlier observation made by Lindgren J in Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248 at 254, [28] , that, "Broadly speaking, an individual or entity, who or which is an 'independent contractor' under traditional concepts should meet the results test.". Their Honours were not in these cases promoting the use of the common law as a substitute for the language of the statute, for that would clearly be erroneous. It is just that, for example, the phrase "the income is for producing a result" in s 87 - 1 (a) and s 87 - 18 (3)(a) of the ITAA 1997 obviously draws upon one of the traditional touchstones for distinguishing between a contract for service and a contract of service. Thus guidance offered by cases decided at common law as to whether a payment is or is not for the production of a result is relevant. That this is what Parliament intended is confirmed by recourse to secondary materials, as Allsop and Lindgren JJ note in their respective judgements. Approaching the matter this way, I respectfully agree with their Honours observations in relation to s 87 - 18 . As to the 80% rule, Lindgren J made the following observation in Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248 at 253, [26] , with which I respectfully agree: Subsection 87-15(3) distinguishes between two situations, namely, where less than 80% of an individual's personal services income (not including certain specified classes of income not presently relevant) is income from the same entity, and where 80% or more of an individual's personal services income is income from the same entity. In the former case (less than 80% from the same entity), if any one or more of the four personal services business tests is satisfied, the personal services income is taken to be from a personal services business, and it is not necessary to apply for a personal services business determination. In the latter case (80% or more from the same entity), if the results test is satisfied, the personal services income is taken to be from a personal services business, and it is not necessary to apply for a personal services business determination. But otherwise, it is necessary for there to be a personal services business determination in force, if the personal services income is to be taken to be from a personal services business. On the findings I have made with respect to the purported Vanuatu invoices and his evidence concerning them, Mr Russell has failed to prove that, in any of the income years in question, more than 80% of Ancath's income did not come from the one source. During those income years Tradecorp was the source of Ancath's income and that income in turn was a reflection of Mr Russell's efforts or skills. For completeness, I should record that Mr Russell did not lead any evidence which would admit of a conclusion that either the unrelated clients test found in s 87 - 20 , the employment test found in s 87 - 25 or the business premises test found in s 87 - 30 of the ITAA 1997 were satisfied.