Skip to content

Post-Implementation Review into the Alienation of Personal Services Income Rules

Background

On 3 June 2009, the then Assistant Treasurer announced that the Board would undertake a post‑implementation review of the provisions relating to the alienation of personal services income. The Board was requested to provide a final report by 31 October 2009 so that any findings and recommendations can inform the Panel undertaking the review of Australia’s Future Tax System, which was due to report by the end of 2009.

The Alienation of Personal Services Income provisions are integrity rules designed to address both the alienation of personal services income through interposing an entity and the capacity of individuals and interposed entities to claim higher deductions than employees providing the same or similar services. The provisions were introduced in 2000 and their effectiveness had not yet been formally reviewed.

The Board’s intention in undertaking the post-implementation review was not to reopen debates about the merits of the policy intent of this measure. The intention instead was to gauge how effective the legislation has been in delivering the policy intent.

The Board appointed a working group of its members comprising Mr Keith James (Chairman), Mr Peter Quiggin PSM and Mr Curt Rendall to oversee the Board’s post‑implementation review into the alienation of personal services income rules.

Terms of Reference

In undertaking this post-implementation review, the then Assistant Treasurer asked the Board to:

In conducting the review, the Board is to have regard to the Government’s taxation review headed by Dr Ken Henry. Further information on the Review of Australia’s Future Tax System (AFTS) can be found at http://taxreview.treasury.gov.au .

The Board has established criteria against which it will evaluate selected legislation. The criteria include the extent to which the legislation:

Submissions

The Board requested written submissions on the post‑implementation review into the alienation of personal services income rules by 27 July 2009. All submissions received were acknowledged. Thirteen public submissions were received and are available for review below.

Board Report & Government Response

On 16 December 2009, the then Assistant Treasurer announced the release of the Board of Taxation’s report  on its post‑implementation review into the alienation of personal services income rules.

The Board welcomed the release of the report and thanked all stakeholders who participated in the review.

The Board’s report on its post‑implementation review into the alienation of personal services income rules is available for download.

In his announcement the Treasurer stated ‘these findings are of concern so we have passed the Board’s report to the Australia’s Future Tax System review. The Government will wait for the final report of the Henry Review before determining the appropriate action in this area.’

A number of recommendations were endorsed by the AFTS review.

Further information

Reference documents relating to this post‑implementation review are as listed below:

Further information on this review can be obtained from the Board of Taxation Secretariat on (02) 6263 4366 or from Taxboard@treasury.gov.au.

Submissions received

SubmitterDownload
Association of Professional Engineers, Scientists and Managers, Australia232KB
Australian Council of Trade Unions55KB
Civil Contractors Federation138KB
Construction, Forestry, Mining and Energy Union3MB
Courier and Taxi Truck Association1MB
CPA Australia72KB
Housing Industry Association22KB
Iemi, Luigi33KB
Independent Contractors of Australia946KB
Institute of Chartered Accountants in Australia146KB
Master Builders Australia93KB
National Tax & Accountants Association14KB
Taxation Institute of Australia52KB

Related resources