myTax 2026 Personal services income

Things to know

This section relates to personal services income (PSI). Complete this section if you:

• received income for personal services you provided as a sole trader
• confirmed the PSI rules apply to you
• have completed the Business and professional items section.

PSI is income that is mainly a reward for an individual's personal efforts or skills.

If more than 50% of the income you received under a contract is for your personal efforts or skills, then all income for that contract is PSI.

If 50% or less of the income you received under a contract is for your personal efforts or skills, then none of the income for that contract is PSI.

You can receive PSI in almost any industry, trade or profession. Some common examples include:

• financial professionals
• information technology consultants
• engineers
• construction workers
• medical practitioners
• if you obtain work through an agency.

For more information, see Taxation Ruling TR 2022/3 Income tax: personal services income and personal services businesses.

PSI doesn't affect you if you're an employee receiving only salaries and wages. But, if you're operating through an entity, such as a company, partnership or trust, and are an employee of that entity then the PSI rules may still apply.

If you earn PSI, and the PSI rules apply to that income, the types of deductions you can claim may be affected. Generally, when you earn PSI and the PSI rules apply to that income, your deductions are limited to those available to an employee. For more information, see Claiming deductions when receiving PSI.

You generally can't deduct spending on capital assets immediately. Instead, you claim the cost over time, reflecting the asset's depreciation (or decline in value). For more information, see Guide to depreciating assets.

If you're registered or required to be registered for Goods and Services Tax (GST), don't include any GST amounts in your assessable income. Your deductions should not include any amounts that relate to input tax credit entitlements.

To find out if you're receiving PSI and if the PSI rules apply to you, see Personal services income.

If your PSI is derived through a personal services entity (PSE), such as company or trust, you may have an alienation arrangement. An alienation arrangement creates a compliance risk if it is used to retain income in the PSE (‘retention of profits’ arrangements) or to divert income to your associates (‘income splitting’ arrangements), or both, so that overall, less tax is paid.

For more information see Practical Compliance Guideline PCG 2025/5 Personal services businesses and Part IVA of the Income Tax Assessment Act 1936.

Video tutorial

The following video shows you how to include a labour hire payment in myTax.

Completing this section

First you'll need to complete the:

• Business and professional items section
• Business income statements and payment summaries section for any of the following where tax has been withheld
  • Income statement
  • PAYG payment summary – business and personal services income
  • PAYG payment summary – withholding where ABN not quoted, or
• Payments and grants reported in TPAR section (if displayed).

To personalise your tax return to show PSI, at Personalise return select:

• You were a sole trader or had business income or losses or partnership distributions
• Business/Sole trader income or loss
• Personal services income

To show your PSI details, at Prepare return select 'Add/Edit' at the Business/sole trader and partnership income (including loss details) banner.

Within the Personal services income banner:

1. Select Net personal services income to expand the section.
2. At Income, myTax will automatically transfer the following personal services income shown in
   • Business income statements and payment summaries where the income type is 'Personal services income'
     • Voluntary agreement
     • ABN not quoted
     • Labour hire or other specified payments
   • Payments and grants reported in TPAR where the income type is 'Personal services income'
     • Labour hire or other specified payments
3. Add up any other personal services income and enter the amount at Other, including amounts you couldn’t show at the Business income statements and payment summaries section.
4. Enter the deductions you're eligible to claim in the corresponding fields (see Claiming deductions when receiving PSI to learn more).
   The Depreciation and capital allowances tool can help you work out any decline in value. It can also work out any deductible balancing adjustment when you stop holding a depreciating asset. Access this tool in the Deductions section on the Prepare return screen.
   Fields from this tool can't be adjusted in myTax. To make any adjustments, or to add new assets to the tool, select the 'Use the depreciation and capital allowances tool' link.

myTax will:

• automatically calculate your Net personal services income
• transfer any tax withheld amounts entered in
  • Business income statements and payment summaries where the income type is 'Personal services income' and tax has been withheld
    • Voluntary agreement
    • ABN not quoted
    • Labour hire or other specified payments
  • Payments and grants reported in TPAR where the income type is 'Personal services income'
    • Labour hire or other specified payments

5. Select Save.
6. Select Save and continue when you have completed the Business/sole trader and partnership income (including loss details) section.