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Personal services income conditions

Last updated 25 June 2019

Use the links and information below to help you answer the questions about your personal service income.

Did any activity satisfy the results test?

If you earn PSI, you satisfy the results test for 2018–19 if, in respect of at least 75% of your PSI, you can answer yes to all of the following three questions:

  • Under your contract or arrangement, was the PSI paid to achieve a specified result or outcome?
  • Did you have to provide the tools or equipment necessary to do your work? (If no tools or equipment were required for your work, answer yes.)
  • Were you liable for rectifying defects in your work?

Your contract must require the production of a specified result or outcome. The contract must also state that payment is conditional upon the achievement of that outcome. The essence of the contract must be to achieve a result and not just do work as required.

Have you received a personal services business determination that was in force for the whole of the period you earned PSI?

This is a notice from the Commissioner stating that you are conducting a personal services business. If you have a personal services business determination from the Commissioner, the PSI rules do not apply to your PSI and any deductions.

Did you receive 80% or more of your PSI from one source?

If you don’t satisfy the results test and 80% or more of your PSI in 2018–19 came from one client and its associate, you cannot self-assess whether you satisfy the other personal services business tests. The PSI rules apply to you unless you get a determination from the Commissioner.

If you don’t satisfy the results test, you can self-assess against the other tests only if less than 80% of your PSI came from each client.

You should consider PSI obtained by merely putting your name with a labour hire firm, placement agency or similar organisation as income from one client.

Special rules apply to commission agents. For more information, phone 13 28 66.

Did you satisfy the unrelated clients test?

You will satisfy the unrelated clients test for 2018–19 if you can answer yes to:

Did you receive PSI from two or more clients who are not associated with each other or with you?

You must provide the personal services work as a direct result of making offers to the public, for example, by advertising. Do not count clients obtained by registering with a labour hire firm, placement agency or similar organisation.

Did you satisfy the employment test?

You satisfy the employment test in 2018–19 if you can answer yes to either of the following questions:

  • Did you have one or more apprentices for at least half of 2018–19?
  • Did you have employees, or did you engage subcontractors or entities, who performed at least 20% (by market value) of your principal work?

Principal work is the main work that generates the PSI and does not usually include support work, such as secretarial duties. You can count a spouse or a family member who does principal work, but not companies, partnerships or trusts associated with you.

Did you satisfy the business premises test?

You satisfy the business premises test if you can answer yes to all of the following questions. For the whole period during which you earned PSI, were your business premises:

  • maintained by you
  • mainly used by you for work earning your PSI, for example, more than 50% of the use
  • used exclusively by you
  • physically separate from your private residence or the private residence of any of your associates
  • physically separate from the business address of your clients or their associates?