The Australian Taxation Office (ATO) has confirmed measures to relieve the potential financial strain of the personal-services income (PSI) provisions on some couriers.
The ATO has confirmed it will allow courier owner-drivers operating under "typical" industry contracts to self-assess as a personal-services business (PSB), thus falling outside the PSI provisions.
However, this news is not "new", according to Australian Trucking Association (ATA) policy manager Neil Gow. He says the ATO "news" is just a confirmation of what it revealed some time ago about the approach it intends to take.
Furthermore, Gow says it does not confirm enough.
In a statement issued on Tuesday night, the ATO confirmed couriers operating under the
Courier and Taxi Truck Contract Determination 2000 and the
General Couriers Contract Determination 1995 that apply across New South Wales (NSW) – "or under contracts that are consistent with them" – will meet the "results test" (that is, where they derive income from producing a result, where they supply their plant and equipment or tools of trade, and where they are liable for rectification) and be allowed to self-assess as a personal-services business.
But as Gow points out: "The confusion about equivalent documents in other states still exists."
While it remains unclear as to what the ATO will be looking for regarding equivalent contracts in other states, it will be a problem if they expect contract determinations across the board, or even contracts clearly separating payment for labour and assets.
In Queensland, for example, most couriers are paid either a fixed hourly rate or per delivery – a completely different situation to NSW, where the determinations set separate hourly rates for vehicle and labour hire.
A joint proposal put forward by industry and unions to implement a contractor determination similar to that in NSW has been rejected by the Queensland government. See separate story
here.
Gow suggests they may take an even softer approach, simply expecting the contract to show "some other way to give evidence of responsibility of rectification".
For its part, the ATO states it has met with a range of transport industry operators and representatives to better understand the contractual arrangements they operate under, and to consult on the details of the re-worked draft rulings.
Comments from a range of industries and tax professionals are now being considered before the finalisation of the rulings.
Gow hopes the ATA's suggestions and comments will find their way into the rulings, although the re-worked drafts do not yet include the association's view.
The ATA's preferred approach is to have all transporters of goods declared as not earning PSI, thus negating any need to self-assess as a PSB.
As it stands, smaller operators will need to self-assess, but look likely to fall outside the PSI regime if they are employed under contracts similar to those in NSW, while larger operators will not be declared as even earning PSI, as the contribution from their truck would consist of more then 50% of the income.
But the breakpoint has not yet been determined, in either asset value or GVM (gross vehicle mass).
Gow says a low GVM, for example one tonne, will benefit most transport operators.
However, if set at, for example five tonne, many more operators will be declared as earning PSI, thus needing to self-assess as a PSB to avoid the alienation measures.
"You'll also get a market distortion based on tax law," he says. This would occur when all those operators planning to purchase a new 4.5-tonne vehicle will instead get a five tonne vehicle to ensure they miss the PSI rules.
"This was not intended and shouldn't be a consequence of tax law," he says.
"(The rules are) okay for legitimate targets, but we're (the transport industry) not legitimate targets.
"And until they set a breakpoint, we can't make a meaningful comment."
The Transport Workers Union, meanwhile, has cautiously welcomed the ATO's confirmation of the rules for couriers.
"These people are legitimate taxpayers - we now find that the tax department is making it clear that they are," NSW state secretary Tony Sheldon says.
"But I won't be celebrating until I see the written document - we have a meeting on Thursday."
Sheldon says the industry's campaign (which has so far included a boycott on delivery of ATO and government freight, and a demonstration march from Sydney to Canberra) will continue until the "promises are delivered in black and white".