Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p7
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 7/34)
Character Range: 1677225–1680009

the personal services entity is entitled: see section 86‑20.
 (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
 (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
 (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.
 (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.

86‑20  Offsetting the personal services entity's deductions against personal services income
 (1) The amount of your *personal services income included in your assessable income under section 86‑15 may be reduced (but not below nil) by the amount of certain deductions to which the *personal services entity is entitled.
Note 1: Subdivision 86‑B limits a personal services entity's entitlement to deductions.
Note 2: If the amount of the deductions exceeds the amount of the personal services income, a deduction for the excess is available to you under section 86‑27. The personal services entity cannot deduct the amount of the excess: see section 86‑87.
 (2) Use this method statement to work out whether, and by how much, the amount is reduced:

      Method statement
           Step 1. Work out, for the income year, the amount of any deductions (other than *entity maintenance deductions or deductions for amounts of salary or wages paid to you) to which the *personal services entity is entitled that are deductions relating to your *personal services income.
           Step 2. Work out, for the income year, the amount of any *entity maintenance deductions to which