Post‑implementation review into the alienation of personal services income rules

On 16 December 2009, the 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 welcomes the release of the report and would like to thank 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. Printed versions of the report are available by email request sent to taxboard@treasury.gov.au or by phoning the Board of Taxation Secretariat on 02 6263 4366.

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 has been 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 is 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 has not been formally reviewed.

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

The Board has 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 Assistant Treasurer asked the Board to:

examine the operation of the rules to determine whether the rules are achieving their desired policy outcome;
identify any problems with the operation of the rules; and
if appropriate, consider options for improving the rules.

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 can be found at www.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:

gives effect to the Government's policy intent, with compliance and administration costs commensurate with those foreshadowed in the Regulation Impact Statement for the measure;
is expressed in a clear, simple, comprehensible and workable manner;
avoids unintended consequences of a substantive nature;
takes account of actual taxpayer circumstances and commercial practices;
is consistent with other tax legislation; and
provides certainty.

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. Copies of public submissions made to the Board are available from the Alienation of Personal Services Income Rules submissions page.

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

Further information on this review can be obtained from Jorge del Busto (02 6263 4365) at the Board of Taxation Secretariat.