Personal services income for the building and construction industry

Working out if your income is PSI

As a building and construction worker, the income you receive is personal services income (PSI) if:

• you are earning the income as a sole trader or through a company, partnership or trust, and
• the majority (more than 50%) of the income is for the skills, knowledge, expertise or efforts of the person who performed the services.

Many contractors and subcontractors operate as a sole trader or through a company, partnership or trust. If you operate through a company, partnership or trust (personal services entities), when we say you or your, we are referring to that personal services entity. The PSI rules apply to the income earned in a financial year, not a calendar year.

What income is PSI?

As a contractor or subcontractor in the building and construction industry, the income you receive for your skills, knowledge, expertise or efforts may be classified as PSI if:

• you are earning the income as a sole trader or through a company, partnership or trust, and
• the majority (more than 50%) of the income is for your skills, knowledge, expertise or efforts, not from materials you supply or tools and equipment you use.

Building and construction workers who commonly receive PSI are:

• painters
• plasterers
• bricklayers
• carpenters
• plumbers
• electricians
• draftspeople
• consultants.

Income can be a mixture of PSI and other income. It is important to analyse the income received from each separate contract to work out whether it is PSI.

To help you work out if the PSI rules apply and how they affect you, we have provided some examples that apply to the building and construction industry.

What income is not PSI?

Some types of income to which the PSI rules do not apply are:

• income you receive from selling or supplying goods - for example, if you build and then sell a house
• income mainly generated from operating significant assets, such as a bulldozer or crane
• income from the work of many employees or contractors.

Income derived by a business which has substantial income-producing assets, or many employees, or both, is unlikely to be PSI.