Personal Services Income

Personal services income (PSI) refers to income generated mainly from an individual’s personal skills or efforts.

How to determine if you have PSI

To determine if income falls under PSI, each separate contract or invoice must be examined. If more than 50% of the income from a contract/invoice is attributable to the individual’s labor, skills, or expertise, then all income received is considered PSI. Conversely, if 50% or less of the income is for their labor or expertise, none of it is classified as PSI.

Certain types of income, such as salary and wages received as an employee, and income from selling finished goods, renting assets like vehicles or machinery, and licensing intellectual property (e.g., patents), are not considered PSI and are not subject to the PSI rules.

Is your income PSI?

If you’ve determines your income to be PSI, it may have PSI rules applied to it. This can affect how to report it, as well as any deductions you may be eligible to make.

 

To find out more, check out the source of our information, business.gov.au