PSI is income that is mainly a reward for the personal efforts and skills of individuals like finance professionals, medical practitioners, IT consultants, etc.
If you receive PSI, PSI rules may apply to your business structure i.e. Company, trust, partnership, etc. This means you effectively ignore the structure that is in place and so, you will be taxed as if you were an employee.
Several types of deductions that may be available to you as a business will be disallowed if PSI rules apply to you. However, if you pass the four tests, you may be classified as a Personal Service Business (PSB) and so, PSI rules will not apply to your income. It is important that you get it right.
If you’re a professional, contractor, or a small business owner receiving personal service income, you can contact us to check whether PSI rules apply to your income and your eligible deductions.
Disclaimer: This article is provided as general information only and does not consider your specific situation, objectives, or needs. It does not represent accounting or tax advice upon which any person may act. Implementation and suitability require a detailed analysis of your specific circumstances. Before taking any action, consider your own circumstances and seek professional advice.