Personal Services Income (PSI)

The ATO have finalised the tax ruling that relates to personal services income (PSI) and personal services business income 

The ruling includes details on

1.    How to identify PSI

2.    How the PSI rules apply to an individual or entity, and

3.    The application of the personal services business (PSB) tests.

Income that is PSI

Personal services income (PSI) is income that is mainly (more than 50%) derived from an individual’s personal skills and efforts, as opposed to income being derived from the use of an asset or by sale of goods.

The ATO have identified the following common examples of PSI recipients

·         Financial professionals

·         Medical practitioners

·         Lawyers

·         IT consultants

·         Engineers

·         Construction workers

Income that is not PSI

It is not considered PSI if less than 50% of the income you received from a contract was for your personal services or skills. The ATO have identified the following income as non-PSI

·         Salary and Wages

·         Supplying/selling goods

·         Supplying or using income-producing assets

·         Income for a business structure

For more details on personal services income visit the ATO.