Unusual circumstances are temporary, short-term circumstances that stop you from passing a PSB test because they are completely out of the ordinary.

The unusual circumstances must specifically apply to the individual that the PSBD is in relation to. Industry-wide circumstances, such as economic downturn affecting a particular industry, cannot be relied on as an unusual circumstance when applying for a PSBD.

The unusual circumstances must be temporary, rather than the 'new norm' or a new mode of operation. The more temporary the circumstances are, and the greater the likelihood that the situation will return to normal, the easier it will be to demonstrate that there were unusual circumstances which prevented you from meeting a PSB test.

If you’re applying for a PSBD in relation to the unrelated clients test, the ATO will also accept the following as unusual circumstances:

• you started a business during the income year and can reasonably expect to pass one of the PSB tests in the next income year, or
• you provided services to only one client during the income year, but you passed the unrelated clients test in one or more prior income years and can reasonably expect to pass the unrelated clients test again in the next income year.