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James Millar
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Henry21, post: 181911 wrote:
Hi all,

Before you say go see a tax accountant – yes I know, and I will go and see more, but I would like to get some opinions first as I have seen tax accountants that just give me blank stares or silence when it comes to this particular piece of law.

Alternatively, if you know an accountant who specializes in PSI laws, please introduce me.

With regards to the PSI rules and 80% or less income coming from the one source, would this situation pass the PSI rules?

A stockbroker maintains a website of which he advertises his general advice services. Through his advertising, he signs up 50 clients with his Stockbroking Firm of which he is an authorised representative. Each of these clients generate $2,000 net brokerage a year, amounting to $100,000. Each of these clients are not related.

The Stockbroking Firm additionally pays the stockbroker a $100,000 retainer for other services within the business (managerial, product development etc).

The stockbroker is paid his salary monthly by the firm. The stockbroker is also paid at the same time by the same firm for the brokerage he generates via his unrelated clients.

The stockbroker is a contractor of the firm through his private company.

As only 50% ($100,000) of the income is from a single source, whilst the other $100,000 is from 50 unrelated sources, I believe this passes the PSI rules. However, because of the fact that the firm provides execution services and access to the markets and pays the brokerage to the broker (and also taking half), does this mean that all $200,000 is from the one source?

Would this not just be a technicality considering that access to markets is not something you can just do individually?

Additionally, would the fact that the broker taking half mean that all 50 clients become a related party of the broker, hence it just becomes 1 source of income?


Had a client with this very problem. A broker for a large firm but he could only ever be paid as salary because it was always going to be a PSI issue. He (with one other) ended up getting their own license and starting their own business (billing clients directly) – obviously solved the problem.

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