Document ID: chunk:federal_register_of_legislation:C2004A00662:clause:1_3:p8
Version: federal_register_of_legislation:C2004A00662
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 8/20)
Character Range: 20597–23387

income is included in the other individual's assessable income under section 86‑15;
the amount worked out under step 4 is taken to be:
where:

original step 4 amount is the amount that would be the amount worked out under step 4 if this section did not apply.

total personal services income is the sum of all the amounts of personal services income (whether your personal services income or someone else's) that are included in the personal services entity's ordinary income or statutory income for the income year.

your personal services income is the sum of all the amounts of your personal services income that are included in the personal services entity's ordinary income or statutory income for the income year.

Example: Continuing example 2 in section 86‑20: Assume that Robyn, another computer consultant, joined NewIT, and NewIT's ordinary income from providing the services also includes Robyn's personal services income of $168,000.

 Because NewIT now receives the personal services income of someone else, Ron's step 4 amount is reduced as follows:

 Under step 5 of the method statement in section 86‑20, the amount of the reduction under that section is therefore $52,500, and the amount included in Ron's assessable income is $67,500.

86‑30  Assessable income etc. of the personal services entity

  *Ordinary income or *statutory income of the *personal services entity is neither assessable income nor *exempt income of the entity, to the extent that it is *personal services income included in your assessable income under section 86‑15.

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

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

 (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.

 (2) To the extent that you are entitled, or any of your *associates