Personal services income is income that is mainly a reward for your personal efforts or skills.
Generally, attributed personal services income is paid either to you or to a personal services entity such as a company, partnership or trust.
Here are some personal services income examples:
- income of a professional practitioner in a sole practice
- Payable income from a contract which for the labour or services of a person
- Income derived by a professional sportsperson or entertainer from the exercise of professional skills
- Income derived by consultants from the exercise of personal expertise.
Personal services income does not include income that is mainly:
- for supplying or selling goods, for example, from retailing, wholesaling or manufacturing
- generated by an income-producing asset, for example, from operating a bulldozer
- for granting a right to use property, for example, the copyright to a computer program
- generated by a business structure, for example, a large accounting firm.
You can find an explanation of the rules relating to the attributed personal service income in Taxation Ruling TR 2003/6: Attribution of personal services income.