Work out if the PSI rules apply to you
If you have worked out that the income you have received is PSI, the next step is to work out whether the PSI rules apply to you.
To do this, you need to work out if you are a personal services business (PSB) in the year that you received PSI.
You can self-assess as a PSB if you:
- meet the results test in relation to at least 75% of your PSI, or
- meet one of the other PSB tests and less than 80% of your PSI is from the same entity and its associates.
The other PSB tests are Unrelated clients test, the Employment test, and the Business premises test.
If you're a company, partnership or trust and you have more than one individual generating PSI, the self-assessment rules and PSB tests need to be applied to each individual. It is possible for one individual to conduct a PSB but not another.
If you are unable to self-assess as a PSB for a particular income year, you may be able to apply for a PSB determination (PSBD) in some circumstances.
If you self-assess as a PSB, or have a PSBD, then the PSI rules will not apply to the PSI you receive in that income year. See What to do if the PSI rules don't apply for more information.
If you are unable to self-assess as a PSB, and do not have a PSBD for the relevant income year, the PSI rules will apply. See What to do when the PSI rules apply for more information.
The PSI rules will not affect:
- the contractual relationships between you and your clients or customers – for example, you do not become an employee or stop being a contractor
- your entitlement to an Australian business number (ABN) or registration for goods and services tax (GST)
- whether you are still considered to be running a business.
You may find this flow chart useful in determining whether the PSI rules apply to you or your business.
If you are still unsure, you may need to seek further advice from us or a registered tax professional.
If you have received personal services income (PSI), you need to determine if the PSI rules apply to that income.