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Alienation of Personal Services Income (PSI) through a structure
Journal article   Open access   Peer reviewed

Alienation of Personal Services Income (PSI) through a structure

Kelley Burton
Australian Business Law Review, Vol.30(4), pp.258-272
2002
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Abstract

Law Accounting, Auditing and Accountability personal services income (PSI) personal services business (PSB)
On 1 July 2000, the Federal Government introduced new personal services income (PSI) rules to attack schemes entered into by individuals to alienate their PSI through an interposed structure, for example, a company, partnership or trust. Individuals may avoid these new rules by self-assessing their scheme to come within the results test, the personal services business (PSB) tests or apply for a PSB determination from the Commissioner of Taxation. Even though their scheme may manage to survive the new PSI rules, it is not likely to survive Pt IVA of the Income Tax Assessment Act 1936 (Cth), which is designed to counter schemes that are entered into for the sole or dominant purpose of obtaining a tax benefit including income splitting. Consequently, individuals should concentrate on other estate planning techniques, where their personal services are likely to be rewarded.

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