Psi Calculator Ato

Use this interactive ATO-focused PSI calculator to estimate whether your income arrangement is likely to fall under the Personal Services Income rules or whether you may qualify as a Personal Services Business. Enter your income concentration and business test details below for a practical, instant assessment.

ATO PSI Eligibility Calculator

Expert Guide to Using a PSI Calculator for ATO Personal Services Income Rules

If you are searching for a PSI calculator ATO, you are almost certainly trying to answer a practical tax question: does the Australian Taxation Office treat your income as Personal Services Income, and if so, do the PSI rules limit deductions or stop income splitting through a company, trust, or partnership? This matters because many contractors, consultants, IT specialists, engineers, creatives, health professionals, and independent service providers earn income primarily from their own skills, effort, or expertise. When that happens, the ATO may classify all or part of that income as PSI.

A calculator like the one above is useful because the PSI regime is not based on a single percentage or one simple tax rate. Instead, it uses a layered decision process. You first consider whether the income is mainly a reward for your personal efforts or skills. If it is, then you look at whether you pass the results test. If not, you then consider the 80% rule and whether you can self-assess using the unrelated clients test, employment test, or business premises test. In the real world, many taxpayers understand the broad concept but get stuck when they try to apply the rules to their own structure. That is why a clear PSI calculator can help you organize facts before speaking with an accountant or tax adviser.

Important: This calculator is an educational estimator based on common ATO PSI decision points. It does not replace a formal tax determination, private ruling, or tailored advice from a registered tax professional.

What is Personal Services Income under the ATO framework?

Personal Services Income is income that is mainly a reward for an individual’s personal efforts or skills. It does not matter whether the income is paid to you directly as a sole trader or first flows through a company, partnership, or trust. If the substance of the arrangement is that clients are paying for your personal work, knowledge, labour, or expertise, PSI may exist. This is why many one-person consulting businesses, contractor structures, and service companies need to review the PSI rules each year.

The policy reason behind the PSI regime is straightforward. Without these rules, a person could potentially channel what is really labour income through an entity in order to access deductions that employees cannot claim or split income to family members on lower tax rates. The ATO rules are designed to look through the structure and ask what is actually being paid for. If the answer is mostly your own effort or skill, the next step is to determine whether you are genuinely operating as a Personal Services Business, often shortened to PSB.

How the PSI calculator works

The calculator above uses the same practical sequence most advisers use in an initial screening conversation:

1. Measure how concentrated your income is by checking the percentage earned from your largest client.
2. Ask whether you pass the results test.
3. If you do not pass the results test, review whether your largest client accounts for more than 80% of PSI.
4. If 80% or less comes from one client, test whether you likely pass one of the remaining PSB tests.
5. If more than 80% comes from one client and you do not pass the results test, the PSI rules are more likely to apply unless you obtain an ATO determination.

That means this tool is not simply a tax calculator in the sense of adding dollars and percentages. It is a structured decision aid. The output tells you whether your facts look more like a Personal Services Business or a PSI arrangement subject to restrictions. The chart also helps you see where your position is strongest or weakest.

The key ATO thresholds in one place

PSI decision metric	Threshold	Why it matters
Income from one client	More than 80%	If more than 80% of your PSI comes from one client, you generally cannot self-assess the unrelated clients, employment, or business premises tests.
Unrelated clients test	At least 2 unrelated clients	You usually need multiple unrelated clients and work obtained through making offers to the public.
Employment test	At least 20% of principal work by others	Supports the argument that the business is not just a vehicle for one individual’s labour.
Business premises test	Dedicated separate premises	Premises should generally be separate from your home and clients’ locations and used mainly for your business.
Results test	All core conditions met	If passed, you may qualify as a PSB regardless of the 80% rule.

Understanding the results test

The results test is often the strongest path out of the PSI rules because, when genuinely satisfied, it can allow a taxpayer to qualify as a Personal Services Business even if client concentration is high. Broadly, the arrangement should look like a business delivering an outcome rather than a person selling their labour by the hour under close supervision. Typical indicators include being paid to achieve a result, supplying the plant or tools needed for the work, and being liable to rectify defects at your own cost. In practice, contracts matter, but conduct matters too. If your contract says one thing and your day-to-day reality looks like ordinary labour hire, the label alone may not save you.

Why the 80% rule is so important

The 80% rule is one of the most misunderstood parts of PSI. People often assume that earning all income from one client automatically means they are employees, or that having two clients automatically solves the issue. Neither assumption is safe. The 80% test is specifically about whether you can self-assess against the remaining PSB tests. If more than 80% of your PSI comes from one source and you do not pass the results test, the PSI rules are much more likely to apply unless you seek an ATO determination.

That is why the calculator asks for both total PSI income and the amount from the largest client. Even a rough client concentration percentage can be revealing. For example, if you earn $120,000 in PSI and $90,000 comes from one client, your concentration is 75%, which keeps the other PSB tests in play. If instead that largest client paid $102,000, your concentration rises to 85%, and the path becomes much narrower.

How the unrelated clients test works

The unrelated clients test is designed to distinguish a genuine market-facing business from an arrangement where one person effectively works for one source of income. In practical terms, you generally need at least two unrelated clients and you normally need to have obtained those engagements through making offers or invitations to the public or a section of the public. Advertising, quoting, tendering, website enquiries, and visible market-facing promotion can all be relevant. Work that simply arrives from one labour hire firm or through internal referrals may be less persuasive depending on the facts.

The calculator therefore asks for the number of unrelated clients and whether services were offered to the public. Both elements matter. Two clients alone may not be enough if there was no genuine public offering process.

The employment test and the role of associates

The employment test looks at whether your business structure involves others in a meaningful way. A common simplified benchmark is whether at least 20% of the principal work is done by employees, apprentices, or associates. This supports an argument that the business is more than a conduit for one individual to earn labour income. The calculator uses the percentage of principal work done by others as a practical screening metric. It does not cover every factual nuance, but it helps identify whether this path may be realistic.

Low employment share Usually suggests the income still depends mostly on one individual’s own labour.

20% or more by others May support the employment test if the work is principal work rather than only admin support.

Evidence required Timesheets, invoices, payroll records, and job scopes are critical if reviewed.

The business premises test

The business premises test focuses on whether you maintain dedicated business premises that are mainly used for your personal services business, are physically separate from your home, and are separate from your clients’ premises. This test is narrower than many people expect. A home office often does not satisfy it. Hot desks, temporary use of a meeting room, or working mostly at a client’s site may also fall short. Because this test can be fact-heavy, the calculator asks a simple yes or no question to help you identify whether you may want a more detailed review.

Real tax rates that make PSI classification important

One reason PSI matters is that labour income is ultimately taxed through the individual tax system, and the PSI rules can limit attempts to divert that income elsewhere. The table below shows Australian resident individual income tax rates for 2024-25, which highlights why classification and attribution can have a real cash-flow impact.

Taxable income	Rate	Tax on this income
$0 to $18,200	0%	Nil
$18,201 to $45,000	16%	16 cents for each $1 over $18,200
$45,001 to $135,000	30%	$4,288 plus 30 cents for each $1 over $45,000
$135,001 to $190,000	37%	$31,288 plus 37 cents for each $1 over $135,000
Over $190,000	45%	$51,638 plus 45 cents for each $1 over $190,000

These figures do not include Medicare levy or special offsets, but they show why PSI is not a niche technical issue. It affects who is taxed, what can be deducted, and whether a structure delivers the intended after-tax outcome. For many contractors, a PSI review can be just as important as selecting the right entity.

Worked example using the calculator

Imagine a software consultant earns $140,000 in PSI through a company. One client represents $98,000 of that total, or 70%. The consultant did not clearly pass the results test because they worked under close direction using the client’s systems. However, they also had two unrelated clients obtained through public quoting, and 25% of the coding work was completed by an employed developer. In that scenario, the calculator would likely indicate that the taxpayer may qualify as a Personal Services Business because the 80% threshold is not exceeded and at least one additional PSB test appears to be met.

Now compare that with a management consultant who earns $180,000, with $170,000 coming from one client. If the results test is not met, the calculator will likely return a warning that the PSI rules may apply because more than 80% of PSI comes from one client and self-assessment of the other tests is generally unavailable without an ATO determination.

Common PSI mistakes

• Assuming a company structure automatically avoids PSI.
• Relying on a contract label rather than the actual working arrangement.
• Counting related entities as separate unrelated clients.
• Treating administrative support as principal income-producing work for the employment test.
• Assuming a home office qualifies as separate business premises.
• Ignoring the 80% rule and self-assessing when the law may not permit it.

Records you should keep

If your PSI position could be questioned, documentation is everything. Keep signed contracts, scopes of work, purchase orders, timesheets, advertising records, tender documents, invoices, defect liability clauses, insurance details, payroll records, subcontractor agreements, and premises lease documents. In a review, evidence is often more important than intention. A strong PSI file can make the difference between a confident self-assessment and a stressful reconstruction exercise months later.

When to seek professional advice

You should speak with a registered tax adviser if your income is close to the 80% threshold, if you are relying on the results test, if you use a company or trust to invoice clients, if you share work across family members or associates, or if your deductions are significant. PSI issues can also intersect with superannuation, payroll setup, GST invoicing, and employment law classification, so a holistic review is often worthwhile.

Authoritative government resources

For official guidance, review the Australian government sources below:

• Australian Taxation Office: Personal services income
• Australian Taxation Office: Australian resident tax rates
• business.gov.au: Taxation guidance for Australian businesses

Final takeaway

A high-quality PSI calculator ATO is most valuable when it helps you organize your facts in the same order the law applies them. Start with whether the income is mainly from your personal skills or effort. Then test the results test, the 80% threshold, and if available, the unrelated clients, employment, and business premises tests. If your profile points toward a Personal Services Business, that may reduce the risk that the PSI rules apply. If your result points the other way, it is better to know early, before tax returns are lodged or distributions are made.

Use the calculator above as a first-pass assessment tool, then compare your situation with the ATO guidance and professional advice if the outcome is material. For contractors and service professionals in Australia, PSI is one of the most important classification issues in the tax system, and getting it right can protect both compliance and cash flow.