14 - Personal services income (PSI) 2012

Did you receive income from personal services you provided?

NO	Go to question 15 - Net income or loss from business, or   return to main menu Individual tax return instructions.
YES	Read below.

Are you a sole trader?

NO	Go to question 15 - Net income or loss from business, or   return to main menu Individual tax return instructions.
YES	Read below.

Your personal services income can include:

• personal services income under a pay as you go (PAYG) voluntary agreement
• personal services income from which an amount was withheld because you did not quote your Australian business number (ABN)
• personal services income from
  
  • working under a labour hire arrangement as an independent contractor
  • payments (called specified payments) for
    
    • tutorial services you provided for the Indigenous Tutorial Assistance Scheme of the Department of Education, Employment and Workplace Relations
    • translation and interpretation services you provided for the Translating and Interpreting Service National of the Department of Immigration and Citizenship
    • performing as a performing artist in a promotional activity.
     
   

You need to know

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

Examples of personal services income are:

• income of a professional practitioner in a sole practice
• income payable under a contract which is wholly or principally for the labour or services of a person
• income derived by a professional sportsperson or entertainer from the exercise of professional skills
• income derived by consultants from the exercise of personal expertise.

Personal services income does not include income that is mainly:

• for supplying or selling goods, for example, from retailing, wholesaling or manufacturing
• generated by an income-producing asset, for example, from operating a bulldozer
• for granting a right to use property, for example, the copyright to a computer program
• generated by a business structure, for example, a large accounting firm.

There are special rules for the tax treatment of personal services income earned by sole traders including contractors and consultants. If you had personal services income as a sole trader and you were subject to the special rules, you will not be able to claim certain deductions, for example, rent, mortgage interest, rates or land tax for your home, or payments to your spouse (or other associate) for support work such as secretarial duties.

You will be subject to the special rules if you were not conducting a personal services business.

Business and professional items 2012 contains the Business and professional items schedule for individuals 2012 (NAT 2816) and the Individual PAYG payment summary schedule 2012 (NAT 3647).

What you may need

• Personal services business self assessment checklist (NAT 3416). This publication will help you decide whether you were conducting a personal services business. It also tells you how to get more information about personal services income issues.
• Taxation Ruling TR 2001/7 - Income tax: the meaning of personal services income
• Taxation Ruling TR 2001/8 - Income tax: what is a personal services business
• Taxation Ruling TR 2003/6 - Income tax: attribution of personal services income
• Taxation Ruling TR 2003/10 - Income tax: deductions that relate to personal services income

Completing this item

Part A

Business and professional items schedule for individuals 2012 and Individual PAYG payment summary schedule 2012

Step 1

Complete the Business and professional items schedule for individuals 2012 and attach it to page 3 of your tax return. If you do not attach your schedule, we will send your tax return back to you and will not consider that you have lodged it until it is returned with all schedules attached. We may apply the failure to lodge on time penalties if this results in your tax return being lodged after the due date. Do not include any of your calculations on your tax return. When you attach your schedule to page 3 of your tax return, print X in the YES box at Taxpayer's declaration question 2b on page 12 of your tax return.

Step 2

If you received personal services income from which tax was withheld, complete the Individual PAYG payment summary schedule 2012 and attach it to page 3 of your tax return. Print X in the YES box at Taxpayer's declaration question 2a on page 12 of your tax return.

Did you write an amount at A item P1 on your Business and professional items schedule for individuals 2012?

NO	Go to question 15 - Net income or loss from business, or   return to main menu Individual tax return instructions.
YES	Read below.

Part B

Net personal services income

Step 1

Transfer your net personal services income or loss shown at A item P1 on your Business and professional items schedule for individuals 2012 to A item 14 on page 13 of your tax return. Do not show cents.

Step 2

If you made a loss, print L in the LOSS box at the right of A.

Step 3

If you made a loss from one or more business activities, check that you have completed items P3 and P9 on the Business and professional items schedule for individuals 2012.

Part C

Tax withheld from personal services income

Did you include an amount at M, N or O item P1 on your Business and professional items schedule for individuals 2012?

NO	Go to Check that you have...
YES	Read on.

1  Did you have amounts of tax withheld under a pay as you go (PAYG) voluntary agreement?

NO	Go to 2 below.
YES	Read below.

Add up all the amounts on your Individual PAYG payment summary schedule 2012 at the Tax withheld boxes with a V in the TYPE box. These amounts must relate to the payments shown at M item P1 on your Business and professional items schedule for individuals 2012. Write this amount at G item 14 on page 13 of your tax return. Do not show cents.

2  Did you have amounts of tax withheld because you did not quote your Australian business number?

NO	Go to 3 below.
YES	Read below.

Add up all the amounts on your Individual PAYG payment summary schedule 2012 at the Tax withheld boxes with an N in the TYPE box. These amounts must relate to the payments shown at N item P1 on your Business and professional items schedule for individuals 2012. Write this amount at H item 4 on page 13 of your tax return. Show cents.

3  Did you have amounts of tax withheld because you received personal services income from:

• working under a labour hire arrangement, or
• a specified payment?

NO	Go to Check that you have...
YES	Read below.

Add up all the amounts on your Individual PAYG payment summary schedule 2012 at the Tax withheld boxes with an S in the TYPE box. These amounts must relate to the payments shown at O item P1 on your Business and professional items schedule for individuals 2012. Write this amount at J item 14 on page 13 of your tax return. Do not show cents.

Check that you have...

• read the publication Business and professional items 2012, completed your Business and professional items schedule for individuals 2012 and attached it to page 3 of your tax return
• transferred the amount from A item P1 on your Business and professional items schedule for individuals 2012 to A item 14 on your tax return. If this amount is a loss, print L in the LOSS box at the right of A
• printed X in the YES box at Taxpayer's declaration question 2b on page 12 of your tax return.

If you received personal services income from which tax was withheld, also check that you have:

• completed your Individual PAYG payment summary schedule 2012 and attached it to page 3 of your tax return
• written amounts at G, H and J item 14, if required
• printed X in the YES box at Taxpayer's declaration question 2a on page 12 of your tax return.

Where to go next Go to question 15 - Net income or loss from business, or   return to main menu Individual tax return instructions   Go back to question 13 - Partnerships and trusts