Tax Australia For freelancers & the self-employed

Personal Services Income (PSI) Check for Contractors

Personal services income check for Australian contractors and freelancers: the 80% rule, results test, PSB tests, deductions and your tax return.

Start free check 11 questions · 7 minutes · No signup

Due 31 Oct

Did you know? The numbers behind this check.

80% of PSIOne-client threshold
75% of PSIResults test
31 OctoberSelf-lodger tax return due
20% of principal work by othersEmployment test

Why this matters.

If you work as a contractor, consultant or freelancer in Australia and most of what a client pays you is for your own skills and effort, that money is personal services income (PSI) under Part 2-42 of the Income Tax Assessment Act 1997. The PSI rules stop people who work much like employees from getting tax benefits that employees can’t, such as splitting income with a partner through a company or trust, or claiming home rent and mortgage interest. Unless you run a personal services business (PSB), the rules limit your deductions (Division 85) and treat income earned through your company, partnership or trust as yours (Division 86).

You are a personal services business if you pass the results test, or if less than 80% of your PSI comes from one client and you pass one of the other tests: unrelated clients, employment or business premises (Division 87). If 80% or more comes from one client and you fail the results test, you need a PSB determination from the ATO. Getting this wrong can mean amended assessments, shortfall penalties and interest, and you must declare PSI correctly in your individual tax return, due by 31 October if you lodge yourself. A single long-term client can also be a sign you are an employee under the Fair Work Act 2009, which brings different rights. This check helps you work out where you stand.

Have these to hand.

Your ABN and a list of the clients who paid you this financial year
Roughly how much each client paid you
Your contracts or agreements with your main clients
Your business structure: sole trader, company, partnership or trust

What you’ll get.

1A score out of 100Where you stand today, at a glance.
2Findings ranked by riskWhat could cost you, highest risk first.
3A plan with timeframesWhat to fix first and by when.

Use this free tool to check whether the personal services income rules apply to you as a contractor or freelancer in Australia, which deductions you can still claim, and what to include in your tax return.