Personal Services Income

The AAT has affirmed that the Personal Service Income (PSI) rules applied to attribute the income of a company to a taxpayer who was the sole director, shareholder and employee of the company.

The Tribunal found that the taxpayer did not satisfy any of the tests required to be excluded from the rules. It also found that the company did not apply for a Personal Services Business (PSB) determination, which would exclude the company from the operation of the PSI rules.

PSI is included in an individual’s assessable income if it is mainly derived from the individual’s personal exertion, whether the income is received directly by the individual or through an interposed entity. However, the rules do not apply if a PSB exists or one of the PSI tests is satisfied.