Home – New Forums Money matters PSI question – Newbie with a headache!

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  • #983415
    ZG Consulting
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    Hi all

    First of all, I want to say thank you for all of your posts, responses and information. It’s been a huge help to me to read these forums whilst I start my sole trader business.

    I’m stuck on the PSI question – I’m a sole trader, purely because I wanted to do work with one company. I write HR policies and documents (60% of my work), and will be answering phone calls from their clients to give HR advice (40% of my work).

    I cannot for the life of me work out…. is it PSI???? I have professional liability insurance (which is required of me under contract), I am liable to rectify any faults/issues, all equipment is mine (except one mobile phone which is theirs), and I am paid upon completion of the work for the policies/documents, and a monthly fee for the HR advice service.

    Anyone who could shine some light on this would be my angel…. my head is killing me trying to work out what I can claim, what I can claim, how to set up a spreadsheet to log it all…… :confused:

    #1142196
    Chris Brodie
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    ZG Consulting, post: 162574 wrote:
    Hi all

    First of all, I want to say thank you for all of your posts, responses and information. It’s been a huge help to me to read these forums whilst I start my sole trader business.

    I’m stuck on the PSI question – I’m a sole trader, purely because I wanted to do work with one company. I write HR policies and documents (60% of my work), and will be answering phone calls from their clients to give HR advice (40% of my work).

    I cannot for the life of me work out…. is it PSI???? I have professional liability insurance (which is required of me under contract), I am liable to rectify any faults/issues, all equipment is mine (except one mobile phone which is theirs), and I am paid upon completion of the work for the policies/documents, and a monthly fee for the HR advice service.

    Anyone who could shine some light on this would be my angel…. my head is killing me trying to work out what I can claim, what I can claim, how to set up a spreadsheet to log it all…… :confused:

    Hi ZG,

    On the face of it you have PSI. You work for the one company (it makes no difference if you are writing policies or answering phones) and the main service you are supplying is your labour and interlect. I know you talk about supplying equipment, but do you specify this on your invoice? If you go to the ATO website and type in Personal Service Income you will get their information and how they view people like yourself in your situation. In short they will treat your income as PSI and some of your deductions will be limited or even disallowed. In simple terms your deductions will be limited to those which a normal employee could claim.

    Have a look at the ATO website, they list the tests you need to past to not have your income treated as PSI. One simple test is the 80 / 20 rule, where more than 20% of your income is earned from another source separate to your main income. On what you have said you fail this test by only working for the one company. Hopefully this helps shed some light.

    All the best,

    #1142197
    ZG Consulting
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    Hi Chris,

    Thank you so much for taking the time to share your thoughts with me! It’s certainly made the whole PSI concept a lot clearer for me.

    Thank you :)

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