Draft Taxation Determination

TD 92/D193 (Withdrawn)

Income tax: are driving school instructors, under the direction and/or control of a principal, employees even when they provide their own vehicle?

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  This document has been Withdrawn.

FOI status:

draft only - for comment

Preamble

1. Yes. Payments to them are salary or wages and tax instalment deductions should be made. Refer to the definition at Section 221A of the Income Tax Assessment Act 1936 and Taxation Ruling IT 2129.

2. The fact that a person provides his/her own vehicle is not, on its own, a deciding factor. As an example, Real Estate sales people also provide their own car, own registration fees, expenses etc. and are subject to the PAYE provisions. Support for that treatment is found in the case of Peter F Burns Pty Ltd v Comr of Stamps (SA) 80 ATC 4220; (1980) 10 ATR 818.

3. Similarly, the degree of control or supervision, alone, can not be a deciding factor. Even though the instructor has special skills and cannot be continually supervised, the employer has 'lawful authority to command so far as there is scope for it' (Zuijs v. Wirth Brothers Pty Ltd (1955) 93 CLR 561).

4. As stated in Taxation Ruling IT 2677, the 'integration' test may also be relevant. 'This test is concerned with whether the individual is performing the relevant services as an individual carrying on business on his or her own account or whether the activities are part and parcel of another's business activity (Stevens v. Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 at 26).'

5. A person could be said to satisfy the integration test where :

(a)

the relationship is a continuing one;

(b)

the individual's activities are in effect restricted to providing service to one principal; and/or

(c)

the individual would not generally profit commercially from sound management in the performance of his tasks, i.e. the individual is so inextricably integrated in the business organisation of the principal that any benefit arising from the individual's work would flow to the principal.

Examples:

1. A goes to work for XYZ School of Driving and uses the car provided by XYZ. A is told that she must be available between certain hours to give lessons. The office staff provide the instructor with the details of new students. A is an employee of XYZ School of Driving.

2. B goes to work at ABC Driving School. He is told to buy a particular colour, make and model of car (eg blue, Ford Laser hatchback) and undertake a training course conducted by the principal of ABC. He signs an employment agreement (stating that he won't work for another driving school or set up his own business in opposition) and is allocated a particular region. He must be available between certain hours and the office staff provide him with the details of new students. B is an employee of ABC Driving School.

Commissioner of Taxation
29/10/92

References

ATO references:
NO UMG0021

Related Rulings/Determinations:

IT 2129
IT 2677

Subject References:
commission
control
driving instructor
employee
integration
PAYE
salary/wages

Legislative References:
ITAA 221A(1)
ITAA 221C

Case References:
Zuijs v. Wirth Brothers Pty Ltd (1955)
93 CLR 561

Stevens v. Brodribb Sawmilling Company Pty Ltd (1986)
160 CLR 16
Peter F Burns Pty Ltd v Comr of Stamps (SA)
80 ATC 4220
(1980) 10 ATR 818