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GB 27: Attribution rule for income from personal services
or “Rules for paying tax on money earned by others doing work for you”
You could also call this:

“Explaining terms for rules about associated persons and work arrangements”

This section explains some terms used in section GB 27. You need to know these things:

When someone does work for someone else, they are ‘associated’ if they are connected at the time the work is done.

When a buyer is getting services, they might not be seen as ‘associated’ with another buyer if:

  • Both buyers are public authorities (like government departments), or
  • The person doing the work can’t be expected to know the buyers are connected unless they ask specifically.

A ‘relative’ of the person doing the work is only counted if they were a relative at the start of the tax year.

The worker’s yearly income includes any fringe benefits (extra things they get besides money) given by someone connected to them.

‘Substantial business assets’ are things used for work that can lose value over time. They must be worth more than $75,000 or 25% of the yearly income from services. These assets can’t be for personal use.

When working out if something is a ‘substantial business asset’, you need to think about how much it’s used for personal reasons. If it’s used for personal reasons 20% of the time or less, it can still count as a business asset.

There are special rules for working out how much something is used for personal reasons, depending on whether it’s subject to fringe benefit tax or not.

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Next up: GB 29: Attribution rule: calculation

or “How to work out income when someone provides personal services through a business”
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Part G Avoidance and non-market transactions
Avoidance: specific

GB 28Interpretation of terms used in section GB 27

  1. This section applies for the purposes of section GB 27.

  2. A person is treated as being associated with another person if they are associated at the time the services are personally performed by the working person.

  3. For the purposes of section GB 27(2)(a), a buyer is not treated as being associated with another buyer if either—

  4. both buyers are public authorities; or
    1. the working person cannot be reasonably expected to know that a particular buyer is associated with another buyer, other than by making a specific enquiry.

      1. For the purposes of section GB 27(2)(b), a person is a relative of the working person only if the person is a relative at the beginning of the relevant income year of the working person.

      2. For the purposes of section GB 27(2)(c), the working person’s annual gross income includes the taxable value of a fringe benefit, as determined under sections RD 25 to RD 63 (which relate to fringe benefit tax), provided or granted by a person associated with the working person.

      3. Substantial business assets means depreciable property that—

      4. at the end of the associated entity’s corresponding income year, has a total cost of more than either—
        1. $75,000; or
          1. 25% of the associated entity’s total income from services for the income year; and
          2. is not for private use.

            1. For the purposes of subsection (6)(a), the cost of depreciable property includes—

            2. the consideration provided to the lessee in the case of property subject to a finance lease or a hire purchase agreement, including expenditure or loss incurred by the lessee in preparing and installing the finance lease asset for use, unless the lessee is allowed a deduction for the expenditure or loss, other than a deduction for an amount of depreciation loss:
              1. the cost price, in the case of property subject to a specified lease.

                1. Subsection (6)(b) does not apply to depreciable property if 20% or less of the property’s use is for private use.

                2. For the purposes of subsection (8), the percentage of a property’s use for private purposes for an income year is calculated according to—

                3. the proportion that the number of days for which fringe benefit tax is payable by the associated entity in relation to the property bears to the total number of days in the income year in which the property is owned by or is subject to a finance lease, hire purchase agreement, or specified lease, involving the associated entity, if the property is subject to the FBT rules:
                  1. the proportion that the expenditure incurred in relation to the property, for which a deduction is denied to the associated entity, bears to all expenditure incurred by the associated entity in relation to the property in the income year, if the property is not subject to the FBT rules.

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                    Notes
                    • Section GB 28(2): substituted, on (applying for the 2010–11 and later income years), by section 239(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section GB 28(6)(a)(ii): amended, on , by section 73 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                    • Section GB 28 list of defined terms 1973 version provisions: repealed, on , by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section GB 28 list of defined terms 1988 version provisions: repealed, on , by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section GB 28 list of defined terms 1990 version provisions: repealed, on , by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).