Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-42 - PERSONAL SERVICES INCOME  

Division 85 - Deductions relating to personal services income  

Operative provisions  

SECTION 85-10   Deductions for non-employees relating to personal services income  

85-10(1)    
You cannot deduct under this Act an amount to the extent that it relates to gaining or producing that part of your * ordinary income or * statutory income that is your * personal services income if:

(a) the income is not payable to you as an employee; and

(b) you would not be able to deduct the amount under this Act if the income were payable to you as an employee.

Example:

Ruth is an architect who works as an independent contractor for one firm. She is not conducting a personal services business. On most days she travels from her home to the business premises of the firm, where she does her work. She also has a home office, where she does some of her work.

This section confirms that Ruth cannot deduct her expenses of travelling between her home and the firm ' s premises because she could not deduct them if she were an employee.

85-10(2)    
Subsection (1) does not stop you deducting an amount to the extent that it relates to:

(a) gaining work; or

Examples:

Advertising, tendering and quoting for work.

(b) insuring against loss of your income or your income earning capacity; or

Examples:

Sickness, accident and disability insurance.

(c) insuring against liability arising from your acts or omissions in the course of earning income; or

Examples:

Public liability insurance and professional indemnity insurance.

(d) engaging an entity that is not your * associate to perform work; or

(e) engaging your * associate to perform work that forms part of the principal work for which you gain or produce your * personal services income; or

(f) contributing to a fund in order to obtain * superannuation benefits for yourself or for your * SIS dependants in the event of your death; or

Note:

For deductions for superannuation contributions: see Subdivision 290-C .

(g) meeting your obligations under a * workers ' compensation law to pay premiums, contributions or similar payments or to make payments to an employee in respect of * compensable work-related trauma; or

(h) meeting your obligations, or exercising your rights, under the * GST law.