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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

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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