Did you receive income for personal services you provided as a sole trader?
Personal services income is income that is mainly a reward for an individual's personal efforts or skills.
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 Student Success Programme (formerly known as the Indigenous Tutorial Assistance Scheme) of the Department of the Prime Minister and Cabinet
- translation and interpretation services you provided for the Translating and Interpreting Service National of the Department of Immigration and Border Protection
- performing as a performing artist in a promotional activity.
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.
You can read What to do when the PSI rules apply for more information, including:
- how to work out whether your income is personal services income
- examples of personal services income, and
- PSI taxation rulings.
No |
Go to question 15 Net income or loss from business 2018, or return to main menu Individual tax return instructions 2018. |
Yes |
You cannot lodge a paper tax return. You must lodge your tax return using myTax or a registered tax agent. |
You need to know
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.
You need to read the publication Business and professional items 2018 before you can complete this item.
Business and professional items 2018 will help you complete your Business and professional items schedule for individuals 2018 and the Individual PAYG payment summary schedule 2018.
What you may need
- Personal services income tool. This tool 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 section and Individual PAYG payment summary schedule 2018
Step 1
Complete the Business and professional items section.
Step 2
If you received personal services income from which tax was withheld, complete the Individual PAYG payment summary schedule.
Did you write an amount at A item P1 on your Business and professional items schedule for individuals 2018?
No |
Go to question 15 Net income or loss from business 2018, or return to main menu Individual tax return instructions 2018. |
Yes |
Read on. |
Part B
Net personal services income
Step 1
Transfer your net personal services income or loss shown at A item P1 in the Business and professional items section to A item 14 on the 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 in the Business and professional items section.
If you carried on a business as an author, dramatic artist, musician, artist, inventor, performing artist, production associate or active sportsperson, you must also write the amount of income you received from these business activities at Z item 24 Other income 2018. You will not be taxed twice on this income.
Part C
Tax withheld from personal services income
Did you include an amount at M, N or O item P1 in the Business and professional items section?
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 on. |
Add up all the amounts on your Individual PAYG payment summary schedule 2018 at the Tax withheld boxes with a V in the TYPE box. These amounts must relate to the payments shown at M item P1 in the Business and professional items section. Write this amount at G item 14 on the 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 on. |
Add up all the amounts on your Individual PAYG payment summary schedule 2018 at the Tax withheld boxes with an N in the TYPE box. These amounts must relate to the payments shown at N item P1 in the Business and professional items section. Write this amount at H item 14 on the tax return. Do not 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 on. |
Add up all the amounts on your Individual PAYG payment summary schedule 2018 at the Tax withheld boxes with an S in the TYPE box. These amounts must relate to the payments shown at O item P1 in the Business and professional items section. Write this amount at J item 14 on the tax return. Do not show cents.
Check that you have...
- completed the Business and professional items section of the tax return
- transferred the amount from A item P1 in the Business and professional items section to A item 14 on the tax return. If this amount is a loss, print L in the LOSS box at the right of A.
If you received personal services income from which tax was withheld, also check that you have:
- completed your Individual PAYG payment summary schedule 2018 and attached it to page 3 of the tax return
- written amounts at G, H and J item 14, if required.
Where to go next
- Go to question 15 Net income or loss from business 2018.
- Return to main menu Individual tax return instructions 2018.
- Go back to question 13 Partnerships and trusts 2018.