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Personal Services Income

What is personal services income?

This is a huge concept no business owner can afford to ignore.

Income from any profession or industry or trade can be categorised as personal services income. When an income is categorised as PSI, the business owner cannot avail of all the deductions which a regular business can avail of and neither can they split the income with their family members.

The following businesses commonly generate personal services income.

Finance professionals

Lawyers

Information technology professionals

Engineers

Construction workers

Medical practitioners

How to find out if your business generates personal services income?

The main question to ask yourself is “are you being paid for your skills, labour or expertise?”

If yes, then you have to follow the PSI regime in your business. If you don’t, you expose yourself to massive penalties from the ATO.

Protect yourself and your business by taking this test now.

https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/Working_out_if_the_PSI_rules_apply.pdf

Contact us at Wagga Accounting for a review of your business.


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