Can a PSB Company Invest in Shares With Undistributed Profits?

 Author: NikkiATO(Community Moderator)Community Moderator

26 May 2026

Hi @AaronF,

It depends, but at a high level there’s nothing in the PSI/PSB rules that restricts what the company can do with its cash.

If your company qualifies as a personal services business, the income is taxed under the normal company rules. From there, any retained profits are just company funds, so the company can invest them (for example, in shares).

Any investment income or gains would form part of the company’s assessable income and be taxed at the company rate. If profits are later distributed, they may carry franking credits based on the tax paid by the company.

The key point is that, once it’s a PSB, the funds are treated like any other company funds – the PSI rules don’t place specific limits on investments.

Reply0 likes

• Report as inappropriate