Personal Services Income or Business
Jan
11
Written by:
Wednesday, January 11, 2012
If you have incorrectly classified yourself as a personal services business (PSB) instead of reporting personal services income (PSI) be on notice that the Tax Office will be conducting audits to ensure tax payers have correctly classifed themselves. The Tax Office have advised tax agents that they intend to start audit activity in this area. An extract of the notice states:
"we will write to some taxpayers who have reported personal services income (PSI) and may have incorrectly self-assessed themselves as conducting a personal services business. If one of your clients is selected for this mailout, you will receive a letter in advance that will include:
- a copy of the client letter
- a list of your clients affected
It is important to identify whether your clients earned PSI and conducted a personal services business in an income year because deductions and reporting obligations may be affected. Our letters are part of ongoing work to raise awareness about PSI obligations.
We encourage you to review and discuss with your clients their self-assessed personal services business status in 2009-10. If they believe they have incorrectly self-assessed, they should make a voluntary disclosure.
You should also consider the PSI rules when lodging their 2010-11 income tax return. If your client has income that passes one or more of the four PSI tests for the income year, the PSI rules will not apply for that year"
If you need assistance with dealing with this issue please contact 02 8264 0755.