PSI rules kick in when over half your income comes from your personal skills, expertise, or sweat equity—think consulting, freelancing, or contract gigs.
What’s the results test for PSI?
You pass the results test if 75% or more of your PSI comes from delivering a specific outcome you control, meaning you call the shots on how the work gets done and shoulder the financial risk.
Three things must line up: you get paid for hitting a result, not just clocking hours; you supply your own tools; and you can delegate the work. Clear the hurdles and the ATO slaps a “personal services business” label on your income—changing how you claim deductions and what you owe in tax.
What’s the difference between PSI and PSB?
PSI is the money you earn; PSB is the tax label slapped on that income when it ticks certain business-like boxes
If your PSI doesn’t meet the PSB test, you’re stuck paying individual tax rates and most rent- or home-office deductions vanish. Clear the PSB test and you might slide into lower business tax rates—but kiss goodbye to a bunch of write-offs. Picture a solo consultant banking $80k: without PSB status, they pay individual rates; with it, they could shave up to 19% off their tax bill.
Can you give me some personal services income examples?
Think fees for your own brain or brawn: consulting gigs, freelance writing, contract coding, even labor-hire sweat
Income from selling products or outsourcing the work doesn’t count. A designer billing $75/hour for custom logos is in PSI territory; a boutique owner flogging print-on-demand shirts isn’t. Ditto a lawyer pocketing professional fees versus a firm flogging legal templates.
Do PSI rules apply to sole traders?
Absolutely—sole traders live in PSI world when more than half their income comes from their own skills
Freelance photographers, graphic artists, even tutors: if your personal services drive the dollars, the PSI rulebook applies. That means goodbye to rent deductions unless you clear the PSB hurdle. A shooter pulling in $60k a year, for instance, must follow PSI rules unless they rejig the business to meet PSB standards.
Can I claim rent if PSI rules apply?
Nope—rent, mortgage interest, rates, and land tax are off the table
Those expenses look too “private” to the ATO. A home-based consultant can’t slice off a chunk of their lease, even with a dedicated office. Instead, they can grab the flat 80-cent-an-hour home-office rate, but that’s a separate animal from PSI-specific deductions.
Is Uber PSI or PSB?
Uber income is PSI if you’re the driver
From 2026 the ATO treats ride-share and delivery income as PSI because it’s all about your personal driving services. You report it under business income, not PSI, unless you somehow qualify as a PSB. A driver banking $45k a year, for example, lists it as business income, not PSI.
How is PSI taxed?
PSI gets tagged to the person who actually did the work, then lumped into their personal tax return
After trimming allowable deductions (think gear, travel, or training), the leftover is taxed at your marginal rate. If the cash flows through a company or trust, it’s taxed at the entity’s rate. A consultant hauling in $90k pays individual rates; a PSB structure might shave a few percentage points off the bill.
Is Uber Eats income PSI?
No—Uber Eats earnings are usually business income, not PSI
Delivering food counts as a business activity even if you’re a contractor. Cleaning services, though, can flip to PSI if your reputation and skills are what the client’s paying for. So a $30k Uber Eats gig goes under business income, while a $25k cleaning gig might land in PSI territory.
Is bookkeeping a PSI?
Yes—bookkeeping income is PSI when you’re the one crunching the numbers yourself
If your bankroll comes from your own bookkeeping chops, the PSI rulebook applies. That means no rent or mortgage-interest write-offs unless you clear the PSB test—hiring staff or piling up unrelated clients, for instance. A bookkeeper pulling $70k a year must play by PSI rules unless they tick the PSB boxes.
What is PSI measured in?
In everyday language, PSI stands for “pounds per square inch,” a pressure gauge used in tires or hydraulic systems
If you’re talking money, PSI means “personal services income,” not some yardstick. Tire pressure of 32 PSI? That’s engineering talk. A freelance consultant’s $85k haul? That’s PSI income. Context matters.
How do you attribute PSI?
Attributing PSI means netting the income after allowable deductions and assigning the leftover to the person who earned it
- Start with total PSI—say, $80k from consulting.
- Knock off any wages you paid others—for example, $20k.
- Strip out excess entity maintenance costs—like $5k in overhead.
- Subtract work-related deductions—another $10k.
- What’s left goes on the individual’s return—$45k in this case.
The same math applies if the cash lands in a company’s account; then the entity’s tax rate kicks in. A consultant with $60k in PSI and $15k in deductions, for instance, ends up attributing $45k to their personal return.
What are some examples of personal services?
Picture any gig where your gray matter or hands-on effort are the main product: legal advice, accounting, management consulting, IT fixes, graphic design, PR stunts
Sell a physical product or hire a team to do the heavy lifting? That’s not PSI. A coder writing custom software for $100k is in PSI land; a software shop flogging off-the-shelf apps isn’t.
What deductions can I claim for PSI?
You can write off work-related costs like ads, insurance, and professional fees, but rent and home-office splits are off-limits
- Winning work: Advertising, tendering, and quoting bills (e.g., $500 for Google Ads).
- Staying legit: Registration and licensing fees (e.g., $200 for a CPA badge).
- Protecting yourself: Income-protection or public-liability policies (e.g., $1,200 a year).
- Getting advice: Accounting or legal fees (e.g., $800 for tax help).
Forget about deducting rent, mortgage interest, or a home-office slice under PSI rules. A freelance writer can claim a $1,500 laptop but not a cut of the rent.
What exactly are personal services?
Personal services income is money you make primarily through your own skills, brains, or physical effort—not from selling stuff or outsourcing the work
An architect designing a skyscraper for $120k is in PSI territory; a construction firm flogging blueprints isn’t. The line is drawn when your income rides on your personal involvement rather than a business structure or assets.
