Payroll, super and FBT

Personal services income (PSI)

Personal services income is income that is mainly a reward for a person's personal efforts or skills, even when it is paid to a company, partnership or trust. The PSI rules can attribute that income back to the individual and limit the deductions the entity can claim, unless the individual or business is a personal services business. The income is not caught if the individual or entity is a personal services business, which it can be by passing the results test, or by passing the unrelated clients, employment or business premises test, or through an ATO determination. The ATO publishes guidance on how to work this out and what records to keep.

General information, not tax advice. The rules change, so check the source page above for the current position. Fedix is developed by Tax7 R&D Pty Ltd.