Peter Costello

Media Releases

Alienation of Personal Services Income

NO.051

Treasurer's Press Release No. 51

Alienation of Personal Services Income

The Government has decided to significantly ease the compliance burden for independent contractors under the Alienation of Personal Service Income measures (the measures) applying from the 2000/2001 financial year.

Under the measures independent contractors who derive 80 per cent or more of their income from the same entity are required to obtain a determination that they are a personal services business.

But under changes announced today such independent contractors will be allowed to self assess their status. They will not have to seek a determination. Even when 80 per cent or more of their income comes from the same entity they can self assess as a personal services business where they derive income from producing a result, where they supply their plant and equipment or tools of trade (if required), and where they are liable for rectification. These are traditional tests for independent contractors.

Of course the measures do not apply at all where a person has a number of clients (does not derive 80 per cent of more of their income from the same entity).

The measures do not apply at all to owner operator truck drivers or couriers who derive income mainly from their truck or vehicle rather than labour or skills.

The measures apply where a person supplies labour or skills and works predominantly (80 per cent or more) for the one person, with no employee performing part of the work, and no separate business premises. Even in this case it does not affect the independent contractor who can meet the test outlined above.

While it will still be open to such people to seek and obtain a determination that they are a personal services business, they will not be required to do so. They will be able to self assess against the criteria set out above regardless of the amount of income that comes from one source.

These people will have self assessed in the past. Under todays announcement they will not have to apply for or seek a determination, but may continue to self assess in the future.

Contact: Niki Savva
02 6277 7340

9 Jul 2001

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