Satisfying the ‘unrelated clients test’
The argument in Fortunatow’s case focused on whether the taxpayer met the second part of the 'unrelated clients test'. This part checks if the taxpayer got clients by reaching out to the public or a section of it.
The taxpayer said he did because he actively promoted his services on LinkedIn and talked about them at industry events. He regularly updated his LinkedIn profile, mentioning when he'd be available for new projects after finishing current ones. He thought this counted as advertising.
The Administrative Appeals Tribunal (AAT) agreed that the LinkedIn promotion counted as reaching out to the public. But it said the taxpayer didn't meet the second part of the test because of the labor hire exception.
The labor hire exception says if you get clients mainly through agencies like labor hire firms, you're not considered to be reaching out to the public. This exception makes it hard for people relying on the 'unrelated clients test'.
The taxpayer argued that the exception shouldn't apply to him because he also advertised directly to end clients, not just through labor hire firms like Hays.
He said his relationship with Hays was like a partnership. They were connected on LinkedIn, and they contacted him when there were job openings.
If you need more information, you can reach Tax Ideas Accountants & Advisers
at +61 2 83181545 or book an appointment.
- Topics on Personal Service Income (1) – Overview of the PSI Rules (1)
- Topics on Personal Service Income (2) – Overview of the PSI Rules (2)
- Topics on Personal Service Income (3) – Overview of the PSI Rules (3)
- Topics on Personal Service Income (4) – Fortunatow’s Case (1)
- Topics on Personal Service Income (6) – Fortunatow’s Case (3)
- Topics on Personal Service Income (7) – Ariss’s Case (1)
- Topics on Personal Service Income (8) – Ariss’s Case (2)
- Topics on Personal Service Income (9) – Douglas’s Case
