Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p10
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 10/34)
Character Range: 1684957–1687631

*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 are entitled, to a share of the net income of the *personal services entity, or of any of your associates, and that income is:
 (a) *personal services income included in your assessable income under section 86‑15; or
 (b) any other amount that is attributable to that income;
that share is neither assessable income nor *exempt income of the entity receiving it or entitled to receive it.

86‑40  Salary payments shortly after an income year
 (1) If:
 (a) before the end of 14 July in a particular income year, you receive, as salary or wages, *personal services income of yours from the *personal services entity; and
 (b) failure to make the payment before the end of 14 July would have resulted in an amount of income being included in your assessable income under section 86‑15 for the preceding income year;
you are taken to have received the payment on 30 June of that preceding income year.
Example: Continuing example 2 in section 86‑20: Assume that NewIT is a small withholder for PAYG withholding purposes, and its PAYG payment period covering April 2001 to June 2001 is the quarter ending on 30 June 2001. NewIT's income for that period (after taking into account any reductions under sections 86‑20 and 86‑25) includes $20,000 that is Ron's personal services income, and NewIT pays this to Ron on 12 July