I earn most of my income as a sole trader and have long struggled with how the income should be declared.
When doing the PSI decision test I have always been advised that "the PSI rules do not apply" - an incredibly unhelpful response that does not make it clear what that means in terms of filling in my return. Specifically, if the PSI rules do not apply, does that mean that my income is not PSI?
This year I found this page that I don't recall finding in previous years that purports to answer the question: https://www.ato.gov.au/Business/Personal-services-income/What-to-do-if-the-PSI-rules-don-t-apply/
This reads to me as if the income still needs to be called PSI, even though the PSI rules don't apply.
However if I declare it as PSI I get a message that says "Personal services Income amounts are not required" and cannot proceed to even calculate a tax estimate.
Looking here it seems the answer is that I list this income as business income: https://community.ato.gov.au/s/question/a0J9s000000Ne4k/p00193729
While this does allow it to be lodged, I can't square that answer with the information at the first link, which suggests it clearly is to be listed PSI income - "Even when the personal services income (PSI) rules don't apply, you still need to declare any PSI amounts at the relevant labels on your tax return."
I am not sure how the information on this from the ATO remains so bad year after year. I am a self-employed sole trader providing professional services - this is not some obscure edge case!
Can anyone clarify what the correct answer is? And can someone from the ATO please fix the bug in the software and provide proper information about how this works?
1,553 views
5 replies