Things you need to know
Personal services income (PSI) is income that is mainly a reward for an individual's personal efforts or skills.
There are certain types of income that is not PSI – for example, for supplying or selling goods, such as, from retailing, wholesaling or manufacturing.
There are special rules for the tax treatment of personal services income earned by sole traders, including contractors and consultants, commonly known as the PSI rules.
If you had personal services income as a sole trader and you were subject to the PSI 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 PSI rules if you were not conducting a personal services business.
You need to read the publication Business and professional items 2023 before you can complete this question. If this applies to you, then you should lodge your tax return using myTax or a registered tax agent. If you are unable to use myTax or a registered tax agent, contact us and we will mail you a paper tax and supplementary return form with fields for questions 14, 15 and 16 and Business and professional items schedule 2023.
Did you receive income for personal services you provided as a sole trader?
No |
Go to question 15 Net income or loss from business 2023, or return to main menu Individual tax return instructions 2023. |
Yes |
You should lodge your tax return using myTax or a registered tax agent. If you are unable to use myTax or a registered tax agent, contact us and we will mail you a paper tax return and Business and professional items schedule 2023. |
What you need to answer this question
To complete this question, you will need:
- Business and professional items 2023 will help you complete your Business and professional items schedule for individuals 2023
- Individual PAYG payment summary schedule 2023 – see, How to complete the Individual PAYG payment summary schedule 2023.
The following guides and tools will help you to understand personal services income:
- Personal services income tool – will help you decide whether you were conducting a personal services business and how to get more information about personal services income issues.
- TR 2021/D2 Income tax: personal services income and personal services businesses
- TR 2001/7W Income tax: the meaning of personal services income
- TR 2001/8W Income tax: what is a personal services business
- TR 2003/6 Income tax: attribution of personal services income
- TR 2003/10 Income tax: deductions that relate to personal services income
Completing your supplementary tax return
If lodging by paper, you can't enter amounts in the supplementary tax return for this question. You should lodge your tax return using myTax or a registered tax agent.
If you are unable to use myTax or a registered tax agent, contact us and we will mail you a paper tax and supplementary return form with fields for questions 14, 15 and 16 and Business and professional items schedule 2023.
To complete this question, review and answer the parts below.
Part A
To complete this question, you need to read and complete the Business and professional items schedule 2023 and Individual PAYG payment summary schedule 2023. Follow the steps below.
Step 1
Complete the Business and professional items schedule, see Business and professional items 2023.
Step 2
If you received personal services income from which tax was withheld, complete the Individual PAYG payment summary schedule 2023.
Step 3
Did you write an amount at question P1 – label A in your Business and professional items schedule for individuals 2023?
No – go to Where to go next.
Yes – continue to Part B.
Part B
You will need to complete Part B of the Business and professional items schedule 2023 relating to your net personal services income. Follow the steps below.
Step 1
Transfer your net personal services income or loss shown at question P1 – label A in the Business and professional items section to question 14 – label A in the tax return. Do not show cents.
Step 2
If you made a loss, print L in the LOSS box at the right of label A.
Step 3
If you made a loss from one or more business activities, check that you have completed question P3 and P9 in the Business and professional items schedule.
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 question 24 Other income 2023 – label Z. You will not be taxed twice on this income.
Part C
You will need to complete Part C of the Business and professional items schedule 2023 relating to your tax withheld from personal services income. Follow the steps below.
Step 1
Did you include an amount at question P1 – labels M, N or O in the Business and professional items section?
No |
|
Yes |
Read on. |
Step 2
Did you have amounts of tax withheld under a pay as you go (PAYG) voluntary agreement?
No |
Go to Step 3. |
Yes |
Read on. |
Add up all the amounts on your Individual PAYG payment summary schedule 2023 at the Tax withheld boxes with a V in the TYPE box. These amounts must relate to the payments shown at question P1 – label M in the Business and professional items schedule.
Write this amount at question 14 – label G in the tax return. Do not show cents.
Step 3
Did you have amounts of tax withheld because you did not quote your Australian business number?
No |
Go to Step 4. |
Yes |
Read on. |
Add up all the amounts on your Individual PAYG payment summary schedule 2023 at the Tax withheld boxes with an N in the TYPE box. These amounts must relate to the payments shown at question P1 – label N in the Business and professional items schedule.
Write this amount at question 14 – label H in the tax return. Do not show cents.
Step 4
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 |
|
Yes |
Read on. |
Add up all the amounts on your Individual PAYG payment summary schedule 2023 at the Tax withheld boxes with an S in the TYPE box. These amounts must relate to the payments shown at qusetion P1 – label O in the Business and professional items section.
Write this amount at question 14 – label J in the tax return. Do not show cents.
Checks before moving to the next question
- completed the Business and professional items section of the tax return
- transferred the amount from question P1 – label A in the Business and professional items section to question 14 – label A in the tax return. If this amount is a loss, print L in the LOSS box at the right of label A.
If you received personal services income from which tax was withheld, also check that you have:
- completed your Individual PAYG payment summary schedule 2023 and attached it to page 3 of the tax return
- written amounts at question 14 – labels G, H and J, if required.
Where to go next
- Go to question 15 Net income or loss from business 2023.
- Return to main menu Individual tax return instructions 2023.
- Go back to question 13 Partnerships and trusts 2023.