Private ruling: Unrelated Clients Test
Published: January 2013
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Whether the PSE passes the unrelated clients test? | A1: Yes.

Relevant facts and circumstances: The test individual provides mining equipment maintenance services to clients on behalf of the PSE. During the relevant income year the PSE contracted to a number of entities as a result of word of mouth referrals and advertising. The above entities are all unrelated and are not associates of one another or the test individual. The PSE did not receive more than 80% of its income from one entity. The test individual does not work in the capacity as an employee for any of the above entities.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 87-20

Reasons for decision: Summary: The PSE meets the unrelated clients test for the relevant income year as: · during the period, the PSE gains or produces income from providing services to two or more entities that are not associates of each other, and are not associates of the individual or of the PSE; and · the services are provided as a direct result of the individual or personal services entity making offers or invitations, to the public at large or to a section of the public, to provide the services. The PSE contracted to a number of unrelated entities, obtained through word of mouth and advertising. We consider these methods of obtaining work demonstrate that the services provided to those entities were provided as a direct result of making offers or invitations to the public at large or to a section of the public. Therefore, the PSE passes the unrelated clients test. As the PSE also passes the 80% rule they are able to self assess against the unrelated clients test to determine whether the PSE is a personal services business. If the PSE determines that they are a personal services business, the personal services income rules will not apply.

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