• Working out if the PSI rules apply

    When working out if the PSI rules apply, you need to look at each contract or job to determine if you have received PSI. If you have received PSI (including if you've received it as a company, partnership or trust), you then need to work out if the PSI rules apply to that income.

    To do this, you need to work through a series of steps in the correct order. The easiest way to do this is by using our Personal services income decision tool. You can see a summary of the steps in the Working out if the PSI rules applyThis link will download a file flow chart (PDF, 135 KB).

    Step 1 is to work out if you've received PSI. Steps 2 to 4 are known as the PSB tests – they'll help you work out if you're running a personal services business (PSB).

    If, after following the steps, you work out that your business is a PSB, the rules won't apply to your PSI.

    The steps are explained in more detail below.

    If more than one individual is generating PSI in your company, partnership or trust, you'll need to work through the steps separately for each individual.

    You may pass one of the tests and qualify as a PSB for one individual but not for another. In this case, the PSI rules will not apply to the PSI earned by the first individual, but will apply to the PSI earned by the second individual.

    Example: two individuals operating through one company

    Mick and Robin are engineers who operate through a company, M&R Engineering Pty Ltd, to provide their services. M&R Engineering Pty Ltd contracts with Agency A.

    Mick and Robin are each required to perform work for and at the direction of the agency's clients. Agency A provides:

    • Mick's services to Client A
    • Robin's services to Client B.

    Both engineers work independently of each other.

    The tests must be applied separately to the PSI of each individual contractor (Mick and Robin) whose income is received by M&R Engineering Pty Ltd.

    End of example

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    • If, after working through the tests, you're still unsure about your circumstances, you can seek further advice.
    Last modified: 30 Mar 2017QC 46003