• Company, partnership or trust

    You'll need to be aware of the following if you operate through a company, partnership or trust and the PSI rules apply:

    Deductions

    The PSI rules that limit the deductions you can claim only apply to income that is PSI. If you earn other income, you can still claim deductions for expenses in earning that other income according to the normal tax rules.

    If you received both PSI and other income, you need to allocate your expenses between each category of income.

    Where the PSI has been generated by more than one individual, the deductions relating to that PSI need to be allocated to the individuals who earned it.

    If the PSI rules apply, you cannot claim the following deductions against that income:

    • rent, mortgage interest, rates or land tax for your home (or your associate's home)
    • payments to your spouse, or other associate, for support work such as secretarial duties
    • expenses that you would generally not be able to deduct as an employee.

    See also:

    Attributing PSI

    The PSI your business receives needs to be allocated (or 'attributed') to each individual who performed the services (after being reduced by certain deductions), and the individual declares the income in their individual tax return.

    See also:

    PAYG withholding obligations

    You will have PAYG obligations for amounts that you pay as salary and wages to the individual who performed the services and for other amounts attributed (treated as belonging) to each individual..

    See also

    Tax return obligations

    Your business, as well as each individual who performed the services, has tax return obligations for the PSI received.

    When the PSI rules apply, you will need to complete the following questions on your business tax return:

    • Business income
    • Personal services income.

    See also

    Last modified: 30 Mar 2017QC 46041