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11 Dec 07 Results test not satisfied - IRG Technical Services

The Federal Court (Allsop J) has held that 2 applicants were not entitled to Personal Services Business determinations under Part 2-42 ITAA 1997 (dealing with "Personal Services Income" or PSI) because the income earned was not for producing a result as required by s 87-18. Rather, in relation to each applicant, the income was for the performance, by their respective operatives, of work as a skilled engineer. Nor were the 2 applicants required to supply their own plant, equipment or tools, even though both operatives chose to use their own laptop computers. However, the Court accepted that the applicants would have been liable for rectifying any defects in the work performed. As all 3 conditions had to be satisfied to meet the "results test" of s 87-18, the Court upheld the Commissioner's refusal to issue Personal Services Business determinations: IRG Technical Services Pty Ltd v FCT [2007] FCA 1867 (Federal Court, Allsop J, 5 December 2007).

For a copy of the decision, go here

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