A number of agencies have recently raised the issue of whether or not it is appropriate for members of Government boards and committees etc. to receive payment for services into partnership/trust/company accounts rather than as individuals for their services.

The Australian Taxation Office has advised that it is not permissible for persons to direct their remuneration into a partnership/trust/company account to reduce or avoid tax through the splitting of income.

Taxation Ruling IT 2330 provides "that income from the rendering of personal services cannot be dealt with as to make it liable to income tax to any person other than the person who rendered the service". In view of this advice the Premier's Department considers that fees paid to part-time members of a Government board to be personal exertion income. Members of all Government statutory and non-statutory boards and committee must be paid on a personal basis with tax instalments deducted.

Agencies should not enter into a contract with a trust or private company where they are engaging an individual, who practices on his or her own account, for the services rendered. This practice is in line with current arrangements for other public employees.

The only exemptions to this would be where a board or committee engages a professional person whose input into the organisation is generated by the staff employed by or with him or her, or where by statute the board is required to engage the services of a person from a particular organisation and that person is required to pay all or part of his or her fees to the organisation. Under these circumstances it is permissible for the board to contract with the organisation for the provision of these services.

Agencies seeking more detailed information about their PAYE obligations should either seek advice from the Australian Taxation Office or obtain independent professional advice.

Taxation and Superannuation Guarantee arrangements for members of boards and committees referred to in circular 93-6 continue to operate.

C. Gellatly
Director General