Item P1 - Personal Services Income

Did the taxpayer receive personal services income that was subject to a PAYG voluntary agreement?

If the answer to the above question is Yes, press Enter to open the Payment Summary schedule (PS) and enter the relevant details. You MUST also answer the questions at item P1 Part A.

The amount at label M will be the sum of entries from the Payment Summary (PS) where the Income type is P and the payment type is V.

Did the taxpayer have any amounts of tax withheld from his/her PSI for failure to quote an ABN?

If the answer to the above question is Yes, press [Enter] to open the Payment Summary schedule (PS) and enter the relevant details. You MUST also answer the questions at item P1 Part A.

The amount at label N will be the sum of entries from the Payment Summary (PS) where the Income type is P and the payment type is N.

Did the taxpayer receive personal services income under a labour hire arrangement or from a specified payment?

If the answer to the above question is Yes, press Enter to open the Payment Summary schedule (PS) and enter the relevant details. You MUST also answer the questions at item P1 Part A.

The amount at label O will be the sum of entries from the Payment Summary (PS) where the Income type is P and the payment type is S.

Did the taxpayer receive any other personal services income?

Enter the sum of all other personal services income not included at labels M, N and O.

Click label J (or K or L) to open the Business Income and Deductions worksheet (Schedule B) to assist in the calculation of this amount. Refer to Schedule B (business income worksheet).

If you use Schedule B it must balance correctly. To ensure Schedule B balances correctly, at the first field in the schedule you must select the point of integration and any amounts entered in the Payment Summary MUST be entered again in the fields provided under Income.

If Schedule B does not balance, a negative value will be included in the return and validation errors will occur.

Additionally, there are fields at the bottom of the Schedule B to include the amount of deductions that apply to the PSI income. This is especially important if the taxpayer is conducting both an ordinary business and a PSI business.

If the taxpayer is registered or required to be registered for GST, do not include any GST amounts in the assessable income.

The PSI rules affect the deductions you can claim against the taxpayer's PSI income. However, they do not affect the taxpayer's legal, contractual or workplace arrangements and the taxpayer will not be treated as an employee as a result of the PSI rules.

Refer to Taxation Ruling TR2003/10 - Deductions that relate to personal services income, which explains the PSI deduction limitation rules.

Show at label K the sum of amounts paid to the associate for principal work.

Payments to associates for principal work amounts integrate from the Schedule B if it is being used. Refer to Schedule B (business income worksheet).

The PSI rules affect the deductions you can claim against the taxpayer's PSI income. However, they do not affect the taxpayer's legal, contractual or workplace arrangements and the taxpayer will not be treated as an employee because of the PSI rules.

Refer to Taxation Ruling TR2003/10 - Deductions that relate to personal services income, which explains the PSI deduction limitation rules.

Show at label L the sum of all other deductions relating to PSI income.

Other deductions relating to PSI income amounts integrate from the Schedule B if it is being used. Refer to Schedule B (business income worksheet)

Only include non-commercial business losses deferred from a prior year if they relate to an activity which is the same as or similar to the taxpayer's current year activity.

Net PSI is calculated by adding labels M, N, O and J, then subtracting labels K and L. The Net PSI is then filled into label A.

If the net PSI is less than zero, business loss activity details must be entered at item P9.