If you are deemed to be receiving Personal Services Income (PSI) and not deemed to be operating a Personal Services Business (PSB) what you are able to claim as a tax deduction is restricted when compared to a regular business.

PSI is essentially income mainly gained as a reward for the personal efforts or skill of an individual. Refer to Section 84-5 of Income Tax Assessment Act 1997.

Taxation Ruling TR 2001/7 gives numerous examples of PSI.

Section 85-10(1) ITAA97, states:  You cannot deduct under this Act an amount to the extent that it relates to gaining or producing that part of your ordinary income or statutory income that is your personal services income if:

(a) the income is not payable to you as an employee; and

 (b) you would not be able to deduct the amount under this Act if the income were  payable to you as an employee.

If you would like to discuss further please contact us:
 McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
 www.mcnamaraandcompany.com.au/contact-us
 Phone +61 3 9428 1062
 Email admin@mcnamaraandco.com

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