15 Aug 2019 Federal Court provides clarification on the personal services income rules
The Federal Court handed down two decisions relating to personal services income (PSI) rules on 12 August 2019.
Income is classified as PSI when more than 50% of the income received under a contract is for a taxpayer’s labour, skills or expertise.
The personal services income rules are integrity provisions which ensure individuals cannot reduce or defer their income tax by diverting income for their personal services through companies, partnerships or trusts. If the rules apply, the individual is taxed on the income directly.
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