Date posted: 09/04/2021

Joint submission on TR 2021/D2 dealing with personal services income

CPA and CA ANZ has lodges a joint submission on draft TR 2021/D2 Income tax: personal services income and personal services businesses

Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia (the Joint Bodies) have lodged a joint submission on the draft Taxation Ruling TR 2021/D2 Income tax: personal services income and personal services business (the draft Ruling).

The draft Ruling provides a consolidated and updated ATO view on the application of personal services income (PSI) to an individual or entity and is intended to replace Taxation Rulings TR 2001/7 and TR 2001/8.  

In the joint submission, we acknowledge the draft Ruling is helpful as it highlights the factors for taxpayers and advisers to consider and provides multiple examples. Nevertheless, the draft Ruling would benefit from further clarification including:

  • further discussion about what is PSI (and whose PSI it is) where different individuals are involved
  • more explanation on the “producing a result” element of the results test
  • the inclusion of comments relating to PSI in draft Law Companion Ruling LCR 2018/D7 Base rate entities and base rate entity passive income.  

We are also concerned with the comments and example regarding the anti-avoidance rules in Part IVA of the Income Tax Assessment Act 1936 - they require further elaboration before concluding Part IVA could apply.