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Follow on Google News | Accountants Sunbury: Business Structures: Personal Services Business or Personal Services Income?By: Sky Accountants The Personal Services Income (PSI) regime ensures all income earned from an individual's personal skills and effort are taxed in the individual's name, regardless of the business structure they are operating on. If you receive PSI, you can apply four tests to find out if you are eligible to be classified as a Personal Services Business (PSB) so PSI rules won't apply on the income you earn. The four PSB tests are Results test, Unrelated clients test, Employment test and Business premises test. Unrelated clients test and business premises test are considered as the "remaining tests" that will apply only if less than 80% of the income is from one client. This is the 80% rule. Other tests can be applied but only one has to be passed for the PSI rules to not apply. The tests must be done each financial year and may result to different results depending on the income you earn per year. It is important to know the difference between the PSI and PSB because it can have a significant impact on the tax you pay. If you pass a PSB test, you can continue as normal and apply all deductions against your income. You can deduct payments to associates for non-principal work, such as administration, secretarial and bookkeeping services. If you are classified as a PSB, there are restrictions that limit the amount of income splitting that you can do. If PSI rules apply to your income, you will be taxed as if you are an employee, regardless of any structure in place. Deductions available to a PSB won't be available to you. PSI attribution means the structure's income will be attributed to you whether or not the money was paid through you. Sky Accountants Sunbury & Bookkeepers Sunbury, our goal is to empower you to become a better, more finance-focused and well-rounded entrepreneur. Contact us at info@skyacc.com.au or 1300 328 855 (tel:1300328855) You can click here (https://www.skyaccountants.com.au/ End
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