Where consulting agreements are not shams and provide for a company to supply an individual's services in exchange for payments to the company, the income is derived by the company, not the individual, for the purposes of s 6-5(2) of the Income Tax Assessment Act 1997 (Cth). It is not permissible to look beyond the terms of non-sham agreements to attribute income to the individual based on the surrounding circumstances (such as the individual performing the work, the company having no other business, or the company retaining funds only briefly), unless some other legal relationship (such as agency, trust, or sham) is established. The prosecution cannot sustain convictions on appeal by advancing a trust argument not put at trial.
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