{"id":271667,"date":"2023-12-11T13:10:09","date_gmt":"2023-12-11T01:10:09","guid":{"rendered":"https:\/\/www.reckon.com\/au\/?page_id=271667"},"modified":"2024-10-04T13:31:30","modified_gmt":"2024-10-04T01:31:30","slug":"personal-services-income","status":"publish","type":"glo","link":"https:\/\/www.reckon.com\/au\/glossary\/personal-services-income\/","title":{"rendered":"What is personal services income?"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”off|desktop” _builder_version=”4.27.2″ custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” custom_padding_phone=”0px||||false|false” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.27.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Definition description” _builder_version=”4.27.0″ header_2_font_size=”32px” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n

Personal services income (PSI) refers to money you earn as a sole trader<\/a> (which primarily depends on your personal skills and labour.)<\/p>\n

Understanding personal services income is important when determining your tax deductions<\/a>.<\/p>\n

\u00a0<\/h2>\n

Personal services income definition<\/h2>\n

[\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2024\/08\/personal-services-income.png” alt=”Working Capital Definition” title_text=”Personal Services Income” align=”center” admin_label=”Image” _builder_version=”4.27.0″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Definition description” _builder_version=”4.27.0″ header_2_font_size=”32px” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n

Personal services income refers to work you\u2019ve done<\/a> as a sole trader. It comprises your fees (for your skills or labour) as opposed to goods or materials.<\/p>\n

As a sole trader, each job or contract you undertake is classed as PSI or not, based on whether your fees comprised more of your labour\/skills than other charges.<\/p>\n

Does personal services income apply to you?<\/h2>\n

If you need to work out whether you are earning PSI, consider the following.<\/p>\n

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When personal services income applies<\/h3>\n

Personal services income rules apply when an invoice for a job completed<\/a> includes fees of more than 50% of the value of the invoice for your personal efforts, skills, and labour.<\/p>\n

If so, the value of the entire job is personal services income.<\/p>\n

When personal services income doesn\u2019t apply<\/h3>\n

Conversely, personal services income rules do not apply when an invoice<\/a> for a job you complete includes fees of less than 50% of the value of the invoice for your personal efforts, skills, and labour.<\/p>\n

If so, the value of the entire job is not considered to be personal services income.<\/p>\n

You also don\u2019t earn personal services income when:<\/p>\n