What is Personal services income?

PSI – Under the Income Tax Assessment Act Personal services income is income produced mainly from your personal skills or efforts as an individual. It doesn't matter whether you are a sole trader or operating through a company, trust or other structure. If the PSI rules apply to you there are restrictions on the types of expenses that are tax deductible for you or your business structure.

You can receive PSI in almost any industry, trade or profession, however, some common examples include financial professionals, information technology consultants, engineers, construction workers and medical practitioners. PSI does not affect you if you are and employee receiving only salaries and wages.

Income is classified as PSI when more than 50% of the amount you received for a contract was for your labour, skills or expertise.

The first thing you need to do is work out if any of your income is classified as PSI. If it is, you then need to work out if special tax rules (the PSI rules) apply to that income.

Follow the links below for more information and find out about:

o    Working out if the PSI rules apply

o    What to do when the PSI rules apply

o    What to do if the PSI rules don't apply

o    Record keeping for PSI

o    Seek further advice

If you would like more information, please contact: