Hi all
Im looking at becoming a sole trader starting out with a couple of days a week but keeping my current job going from full time to part time (4 days per week). Will that 4 days worth of work count under the whole PSI no more than 80% from a single contract, I would be contracting to 1 person so need to figure out if it will work or if I need another revenue source to get that 80-20% split.
Thanks for reading
TL
The 4 days per week is classed as employment income and is not included in your assessable income for PSI. Only income earned under your ABN will be considered PSI.
The 4 days per week is classed as employment income and is not included in your assessable income for PSI. Only income earned under your ABN will be considered PSI.
Hi @TomLen,
Your 4 days per week employment income won't count towards the 80% personal services income (PSI) rule. The 80% rule only applies to income you earn as a sole trader or entity you're associated with (Director, Trustee), not your employment income.
When working out if 80% or more of your PSI comes from one source, you only consider the income from your sole trader activities. In your case, this would be the income from the one day per week contracting work. Your employment income from the 4 days per week job is separate and doesn't factor into the PSI calculations.
The 80% rule is one of the tests used to determine if you're operating a personal services business. If 80% or more of your PSI comes from one client, you'll need to satisfy one of the other tests to access business deductions.
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