• Service: Tax
  • Industry: Financial Services, Banking
  • Type: Business and industry issue, Regulatory update
  • Date: 19/08/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Adam Gibbs

Adam Gibbs
Partner, Tax

+61 2 9335 7310

What are 'services' and 'work'? 

by Adam Gibbs, Financial Services Specialist
In a recent decision, Obeid v ACCC [2014] FCA 839, the Federal Court gave extensive consideration to the definition of 'services' in the Competition and Consumer Act 2010 and to the ordinary meaning of that word. This definition is similar to that used in tax legislation, for example, in the transfer pricing provisions, former sec 136AA, in the CFC rules, sec 317, and in identifying non-cash business benefits, sec 21A.

In Obeid, the Court was considering the validity of a sec 155 notice (similar to a tax sec 264 notice) and, critically, whether the notice validly stated the alleged contravention being investigated. The allegation was of anti-competitive conduct for the "acquisition of services, namely the right to apply for the necessary approvals for mining activities in the Relevant Areas from the Crown". In the result, the Court held that the right to apply fell within the definition of 'services'.


The Court held the definition extended the ordinary meaning of services, particularly through the contracts (agreements) extension and the rights extension. This was to overcome the limitations on the concept of 'services' identified by the High Court in Employers’ Mutual Association Limited v FCT (1943) 68 CLR 165.


In Revesby Credit union Co-operative Limited v FCT (1965) 112 CLR 564, McTiernan J explained this decision saying that "’the rendering of services’ must involve the doing of work of some kind, and that the mere making of a contract, such as the issuing of an insurance policy cannot be put into this category, even though work may be done in pursuance of the contract."


The decision is relevant to income tax in a number of areas:

  • The broad scope of the concept of 'services', particularly for the transfer pricing and value shifting provisions.
  • The reasoning that the 'performance of work' may entail something less than the "rendering of services", particularly relevant for the consolidation rights to future income 'prospective rules' and the definition of a 'work in progress (WIP) amount asset' (sec 701-63(6)). In this respect, the Court’s reasoning may suggest that any rights under an executory contract may give rise to a WIP amount asset.

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