• The results test

    If you have worked out that your income includes PSI, your next step is to work through the results test. To pass the results, you need to meet the following three conditions for 75% of your PSI:

    • paid to produce a specific result
    • required to provide the equipment or tools
    • required to fix mistakes at your own expense.
    Attention

    If you obtain work through an agency, you most likely don't pass the results test. Generally, if your business receives PSI from a contract with an agency, it will be for general labour, not to produce a specific result.

    End of attention

    Example 1: Erica - one agency, three end users

    Erica's company, Erica's Consulting Pty Ltd, contracts with Agency 1 for the provision of Erica's services. Erica is required to perform work for and at the direction of the agency's clients. Agency 1 has three contracts that Erica works on. Erica's company receives 100% of its income from Agency 1.

    Income flow:

    Income flow for 1 agency, 3 end users

    Example 2: Alan - two agencies, one end user

    Alan's company, Alan's Architectural Services Pty Ltd, contracts with two agencies, Agency 1 and Agency 2, for the provision of Alan's services. Under both contracts, Alan is required to perform work for and at the direction of the agencies' clients. Agency 1 and Agency 2 provide Alan's services to the same client; Big Corp. Alan's company receives 50% of its income from Agency 1 and 50% from Agency 2.

    Income flow:

    Income flow for 2 agencies, 1 end user

    Example 3: Simon - two agencies, two end users

    Simon's company, Simon's Trade Services Pty Ltd, contracts with Agency 1 and Agency 2 for the provision of Simon's services. Under both contracts, Simon is required to perform work for and at the direction of the agencies' clients. Each agency has a different client. Simon's company receives 50% of its income from Agency 1 and 50% from Agency 2.

    Income flow:

    Income flow for 2 agencies, 2 end users

    In these examples, Erica, Alan and Simon are not employed by the agencies, their companies are contracted to provide services to the agencies. They are not contracted to complete a specific result or outcome, they are merely contracted to provide labour.

    This means that the PSI is not being generated to produce a specific result so these businesses don't pass the results test. The PSI rules apply to the PSI received unless they pass one of the other tests.

    End of example

    Find out more

    To work out if you pass the results test, see Step 2: The results test

    End of find out more
      Last modified: 14 Sep 2016QC 46087