The ATO advises tax agents that in September 2012, it will write to taxpayers who have reported personal services income (PSI) but may have incorrectly self-assessed themselves as conducting a personal services business. If an agent's client is selected for this mailout, the agent will receive a letter in advance that will include:
- a copy of the client letter
- a list of affected clients.
It is important to identify whether the clients earned PSI and conducted a personal services business in an income year because deductions and reporting obligations may be affected. If the client has PSI that passes one or more of the four PSI test for the income year, the PSI rules will not apply for that year.
Where the client decides that they have passed one or more of the tests, the ATO may ask them to provide further information relation to their decision.