Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 2/34)
Character Range: 1664119–1666919

the right had always been a right to acquire the beneficial interest in the *share.

Part 2‑42—Personal services income

Division 84—Introduction

Guide to Part 2‑42

84‑1  What this Part is about

      This Part is about 2 issues relating to personal services income.
      Division 85 limits the entitlements of individuals to deductions relating to their personal services income.
      Division 86 sets out the tax consequences of individuals' personal services income being diverted to other entities (often called alienation of the income).
      These Divisions do not affect individuals or other entities that conduct personal services businesses. Division 87 defines personal services businesses.
Note: This Part may not apply until the 2002‑03 income year to participants in the prescribed payments system on 13 April 2000: see item 26 of Schedule 1 to the New Business Tax System (Alienation of Personal Services Income) Act 2000.

Table of sections
84‑5 Meaning of personal services income
84‑10 This Part does not imply that individuals are employees

Operative provisions

84‑5  Meaning of personal services income
 (1) Your *ordinary income or *statutory income, or the ordinary income or statutory income of any other entity, is your personal services income if the income is mainly a reward for your personal efforts or skills (or would mainly be such a reward if it was your income).
Example 1: NewIT Pty. Ltd. provides computer programming services, but Ron does all the work involved in providing those services. Ron uses the clients' equipment and software to do the work. NewIT's ordinary income from providing the services is Ron's personal services income because it is a reward for his personal efforts or skills.
Example 2: Trux Pty. Ltd. owns one semi‑trailer, and Tom is the only person who drives it. Trux's ordinary income from transporting goods is not Tom's personal services income because it is produced mainly by use of the semi‑trailer, and not mainly as a reward for Tom's personal efforts or skills.
Example 3: Jim works as an accountant for a large accounting firm that employs many accountants. None of the firm's ordinary income or statutory income is Jim's personal services income because it is produced mainly by the firm's business structure, and not mainly as a reward for Jim's personal efforts or skills.
 (2) Only individuals can have personal services income.
 (3) This section applies whether the income is for doing work or is for producing a result.
 (4) The fact that the income is payable under a contract does not stop the income being mainly a reward for your personal efforts or skills.

84‑10  This Part does not imply that individuals are employees
  The application of this Part to an individual does not imply, for the purposes of any