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Ruling
Subject: Personal Services Income
Question
Whether the income is personal services income?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2012; and
Year ended 30 June 2013.
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
The Company performs surgery and procedures on patients and also generates income from the sale of goods.
One individual is the Company's sole shareholder, director and principal practitioner.
The Company employs non-principal practitioners on a profit share basis to perform various procedures on patients.
The Company also employs staff whose duties include; various administrative functions, nursing of patients, assisting the practitioners before, during and after procedures are performed.
The practitioners use several items of specialised equipment to perform procedures.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 84-5
Reasons for decision
You receive personal services income when you have income that is mainly a reward for your personal efforts or skills and not mainly a reward from the use of assets, the sale of goods or a business structure. If it is not, then that particular amount of income is not personal services income.
In your case, we consider the following factors indicate the income is from the use of a business structure:
§ the Company employs non-principal practitioners and one principal practitioner. This ratio indicates the income is not significantly dependent upon a particular individual's personal efforts or skills.
§ the Company employs staff to assist the practitioners, nurse patients and perform various administrative functions.
§ the practitioners use several items of specialised equipment to perform procedures. We determine these to be significant income producing assets.
Therefore, as the income is generated from the use of a business structure and the sale of goods, the income of the Company is not PSI within the meaning of section 84-5 of the ITAA 1997.