Item P1 - Personal Services Income 2023

The ATO has decommissioned the payment summary schedule (PS) for individual returns and introduced a new schedule Business income statements and payment summaries (bip) 2023.

At Part A if the question Did you receive any personal services income? Is answered No, the numerous labels making up this item become inactive and the cursor moves to item P2.

If the question is answered Yes, you must complete the eligibility questions at P, C and Q. The answers to these eligibility questions will dictate which further labels at P1 must be filled in.

If you're a former STS taxpayer, click this link for information on the continued use of the STS accounting method on the ATO website. To assist with answering the questions at labels P, C and Q and the business tests at D1, E1 and F1, read PSI Business tests and What is personal services income PSI?

What is Personal Services Income (PSI)?

Click this link for information on the

Personal services income essentials

on the ATO website

Income as a performing artist in a promotional activity

Any income that relates to Eligible professional income, the taxable professional income must also be included at item 24 label Z and if averaging is to apply, the prior years' professional income amounts must be entered in the Properties > Estimate tab > Div405 averaging for such taxpayers.

Personal Services Business Qualification

See Personal services income and Working out if PSI rules apply on the ATO website.

Part B

These PSI income labels integrate from the Business Income Statements and Payment Summaries (bip) schedule where the income type is P and the payment type i

001: Labour hire.
002: Other specified payments.
003: Voluntary agreement.
011: Foreign resident withholding.
012: No ABN quoted.

Label M - PSI-voluntary agreement

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 Business Income Statements and Payment Summaries (bip) 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 Business Income Statements and Payment Summaries (bip) schedule where the Income type is P and the payment type is 003

Label N - PSI where ABN not quoted

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 Business Income Statements and Payment Summaries (bip) 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 Business Income Statements and Payment Summaries (bip) schedule where the Income type is P and the payment type is 012.

Label O - Labour hire or other specified payments

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

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 001.

Label J - PSI - Other income

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) 2023.

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.

Part B - Deductions

Click this link for information on the Deduction labels on the ATO website and refer to the paragraph What deductions you may be able to claim. Also, refer to Taxation Ruling TR2003/10 - Deductions that relate to personal services income, which explains the PSI deduction limitation rules.

Label K - Deductions for payments to associates for Principal Work

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) 2023.

Label L - Total Amount of Other Deductions Against PSI

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) 2023

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.

Label A - Net PSI

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.