Taxpayers should remember that, if over half their income is from a contract for their personal effort or skills, then their income is classified as personal services income (‘PSI’).

Taxpayers can receive PSI in almost any industry, trade or profession, e.g., as a financial professional, IT consultant, construction worker or medical practitioner.

Taxpayers who earn PSI while running a business (e.g., as a contractor) need to work out if they were a personal services business (‘PSB’) in the year that they received the PSI, as this will affect the deductions they can claim.

Taxpayers can self-assess as being a PSB if they:

  • meet the ‘results test’ for at least 75% of their PSI, or
  • meet one of the other PSB tests (i.e., the unrelated clients test, the employment test, or the business premises test), and less than 80% of their PSI is from the same entity and its associates.

Taxpayers who self-assess as a PSB still need to report their PSI in their income tax return and keep certain records.


T-Bar Accounting ARE ACCOUNTING EXPERTS DEVOTED TO HELPING BUSINESS & FARMING PEOPLE WITH THEIR FINANCIAL HEALTH

When you work with us, you’re not just a client, you become part of the “T-Bar Tribe”.  We take the time to get to know and understand you and your business and personal financial goals.