Lucy is an IT professional and has many years of experience. She has recently married, and has set up a private company with her spouse “IT Ahead” Pty Ltd. Lucy and her spouse are directors and shareholders. IT Ahead “employs” Lucy as an IT consultant and employers her spouse to undertake part-time administrative duties.
IT Ahead registers with a number of IT agencies and Lucy also offers her services to a number of firms she has previously worked for. Through an agency, IT Ahead signs contracts to provide IT services to two clients which are multinational corporations.

•  The terms of contract include:
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• -IT Ahead to perform services assigned by the clients;
• -The clients will give directions to the IT contractors employed by IT Ahead;
  • -IT Ahead will be paid for work done at a specified hourly rate on submission of invoices detailing the hours worked as recorded on timesheets;
  • -The clients will nominate hours to be worked to meet deadlines;
  • -The clients will reimburse expenses of IT Ahead outside the scope of the contract;
  • -All work is to be done at the client’s premises on computers provided by clients; and
  • -Unsatisfactory work would be made good at the expense of IT Ahead.
  • 
    Required: Advise Lucy and IT Ahead as to the assessability of amounts received from the clients applying the alienation of personal services income regime. Support your answer with relevant legislation and case law.

Answer rating: 100% (QA)

The amounts received from the clients for IT services will be assessable as income under the alienat... View the full answer