Personal Services Income: The Facts

As seasoned business advisors with years of experience working alongside Australia's medical professionals, we aim to clarify some prevalent misconceptions about Personal Services Income (PSI) and Personal Services Businesses. Overlooking the legislation can have serious repercussions, including an Australian Taxation Office (ATO) review or audit, potential tax avoidance charges, and hefty penalties.

It's crucial to recognise that the income streaming rules are not recent. However, their importance is often underestimated or misunderstood. If the concept of PSI or income splitting from a personal services business is unfamiliar, it's time to ask questions—even seek a second opinion.

I talked with Peter Johnson from Advisers Digest, a tax and superannuation expert, to explain the ins and outs of PSI.

Personal Services Income: The Facts

Personal Services Income is income earned primarily from your personal skills, knowledge, or efforts. For medical professionals, the income you generate through your personal services is often classified as a personal services business. Whether you're operating as a sole trader, through a trust, a partnership, or a company structure, this classification persists.

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