Once you have worked out the income you have received is PSI the next step is to work out whether the PSI rules apply to you.
To do this, you need to work out if you are a personal services business (PSB) in the year that you received PSI. If you self-assess as a personal service business the PSI rules do not apply to your PSI.
You can self-assess as a PSB if you:
- meet the results test in relation to at least 75% of your PSI, or
- meet one of the other PSB tests (Unrelated clients test, the Employment test, the Business premises test) and less than 80% of your PSI is from the same entity and its associates.
If you're a company, partnership or trust and you have more than one individual generating PSI, the self-assessment rules and PSB tests need to be applied to each individual.
It is possible for one individual to conduct a PSB but not another.
If you are unable to self-assess as a PSB for a particular income year, you may be able to apply to the ATO for a personal services business determination (PSBD) in some circumstances. A PSBD is a notice from the Commissioner of Taxation which states that one of the PSB tests has been met for the relevant income year.
If you self-assess as a PSB, or have a PSBD, then the PSI rules will not apply to the PSI you receive in that income year.
If you are unable to self-assess as a PSB, and do not have a PSBD for the relevant income year, the PSI rules will apply. You may find this flow chart useful in determining whether the PSI rules apply to you or your business.
