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Income Case Summary

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If income is considered as PSI, necessity is determining how it is taxed. Results test examines engagement of services rendered and payment due with certain outcomes required to complete the job . It requires results created and payment received on completion of contracted work, all tools necessary to be supplied by taxpayer to perform the work, and personal responsibility for rectifying any performed work’s deficiency with insurance, inclusively meet in respect of at least 75% of PSI for the test to be satisfied . Generally, medical practitioners in private practice will engage in separate contracts with patients to provide medical services with required tools or equipment, which were owned by CP , in return for an agreed payment from them and be personally responsible for any poor conduct at any time during or after services provided as indicated in Roman’s obtained professional liability insurance.Therefore, Roman passed results …show more content…

CP’s appropriate premises rented is less likely to be private or client’s and used completely for providing medical services. Subsequently, PSI rules in Division 85 & 86 do not apply.
Conclusion
PSI rules may limit deductions claimed against PSI and taxpayer is entitled with certain tax return reporting obligations for the PSI received . The study of Roman case helps explaining PSI rules as an integrity measure to restrict reduction of an individual’s tax obligation by diverting PSI via a business structure, and process of determining whether PSI rules are applicable. Although application of PSI rules may be avoidable, taxpayer still need to declare PSI on tax return and any tax benefit arises in certain situations and impacts claimed tax deductions may still be rejected by the Commissioner of Taxation

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