If the personal service income rules apply to you, your personal services income will be treated as your income and you must include it in your individual tax return. The changes to the tax law do not affect your legal, contractual or workplace arrangements with clients.

What is personal services income? This is income that is mainly a reward for an individual's personal efforts or skills. It does not include income that is mainly:

• for supplying or selling goods (for example, from retailing, wholesaling or manufacturing), or
• generated by an income-producing asset (such as a bulldozer) or
• for granting a right to use property (for example, the copyright to a computer program), or
• generated by a business structure (for example, an accountant working for a large accounting firm).

If personal services income is channelled through a company, partnership or trust (a personal services entity), it is still the individual's personal services income for income tax purposes. The changes to the tax law only apply to personal services income.




Use the flow chart to see if your income is affected

To work out if your income is affected by the changes to the tax law follow the steps outlined in the flow chart below. If the personal services income is paid to a company, partnership or trust, the words you and your refer to that entity.

The four tests

The four tests for determining whether a personal services business is being conducted in an income year are the:

- Results test
- Unrelated clients test
- Business premises test
- Employment test

If you meet one or more of the tests, your personal services income is taken to be generated in the course of conducting a personal services business and the changes to the tax law will not affect your income.

If the personal services income is paid to a company, partnership or trust, rather than to you directly, the entity is your personal services entity.


Please note the information contained on this website is general in nature and should not be relied upon as tax advice. If you have a question please contact Sean Urquhart on 02 8264 0755.