Personal services income (PSI)

If your trust mainly earns income from providing services to your clients, it may be a personal services entity (PSE). 

Your trust will not be a PSE if it primarily earns income from the use of assets, sale of goods, or from a business structure.

If your trust is a PSE, you need to apply certain tests to check whether the PSI rules apply to your trust. The rules will not apply if your trust meets one or more of the tests. 

If the rules do apply, it’s critical you understand how the PSI is going to be treated for tax purposes. It will affect how you report your PSI to the ATO and the deductions you can claim. The net PSI will be treated as your individual income for tax purposes and be taxed at individual rates. The trust will not be able to split it among other beneficiaries.

Starting a small business

Steps Progress

Is my hobby a business?

9 mins

Business structures overview

5 mins

Business registrations

5 mins

Sole trader structure

7 mins

Partnership structure

10 mins

Company structure

13 mins

Trust structure

7 mins

Small business support

10 mins

Related courses

1 mins

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