Taxpayers need to consider their position with regards to the new legislation. These rules ensure an individual is taxed on all their Personal Services Income (PSI), unless they are carrying on a Personal Services Business (PSB). The meaning of PSI broadly, is income that is a reward for personal efforts or skill, whether derived personally or by an interposed entity.
Determining whether income is PSI will depend on the exercise of practical judgement as to whether the value of the individual's input exceeds that of other inputs, such as the efforts of the workers, the use of equipment and so on. The meaning of PSB, considers the application of four personal services business tests:
- The Results Test
- Unrelated clients test
- Employment test
- Business premises test
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