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Edited version of your private ruling
Authorisation Number: 1012591579129
Ruling
Subject: Results test
Question
Does the Personal Services Entity (PSE) pass the results test?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2013.
The scheme commenced on:
1 July 2012.
Relevant facts and circumstances
The test individual, through the PSE practices medical services through an unrelated, independent medical practice (the Clinic).
The test individual consults with patients at the Clinic who pay the Clinic via the PSE's invoice or bulk bill after each consultation. The moneys are collected and then deposited into the PSE's bank account by the Clinic.
The Clinic invoices the PSE separately for the cost of administration services.
The PSE is required to provide its own medical tools and implements.
The PSE would be liable for damages if found negligent and holds several types of insurance including professional indemnity insurance.
Greater than 75% of the PSE's income is generated in the manner detailed above.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 84-5
Income Tax Assessment Act 1997 - Section 87-18
Reasons for decision
We have determined that the PSE passes the results test for the period, as for greater than 75% of their PSI they satisfy the requirements of the results test. When making our decision we considered the following:
· The PSE's income is income for producing a result;
· The PSE issues an invoice or bulk bills after each consultation. Given the specific nature of the work and that full payment only occurs when the consultation is completed; the essence of the arrangement is to produce a specific result. There is a sufficient connection between the completion of an outcome and the payment received. Therefore, this condition is satisfied.
· The PSE is required to supply the plant and equipment, or the tools of trade (if any) needed to perform the work from which you produce the result; and
· The PSE is required to provide its own medical tools and implements. Therefore, this condition is satisfied.
· The PSE is, or would be, liable for the cost of rectifying any defect in the work performed.
· The PSE would be liable for damages if found negligent and holds several types of insurance including professional indemnity insurance. Therefore, this condition is satisfied.
As all three requirements are satisfied, the PSE passes the results test for the period.
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