Step 1: Have you received PSI?
When working out if your income is PSI, you need to look at the income received from each separate contract. The terms and conditions of the contract, as well as invoices and written agreements (which show the arrangement for the work), are important in working out if the income is PSI.
Calculate what percentage of income from each contract was for:
- your labour, skills, knowledge, expertise or efforts for the services you provided
- anything else, such as the materials supplied and/or tools and equipment used to complete the project.
If more than 50% of the income received for a contract was for your labour, skills or expertise, then all income for that contract is PSI.
If 50% or less of the income received for a contract was for your labour, skills or expertise, then none of the income for that contract is PSI.
Salary and wages as an employee and some other types of income will not be affected by the PSI rules.
- If the income you received from any of your contracts is classified as PSI, proceed to Step 2: Results test to continue working out if the PSI rules apply.
- If no income from any of your contracts is PSI, then you do not have to read any further as there are no changes to your tax obligations.
When working out if your income is PSI, you need to look at each separate contract. If more than 50% of the amount received was for your personal skills, knowledge, expertise or efforts, that income is classified as PSI.