Contractors

Do the PSI rules
catch your income?

Division 84-87 is one of the most self-assessed-wrong parts of the tax system, and getting it wrong costs you your deductions. This walks the tests in order and tells you plainly where the answer is no, probably, or genuinely not decidable without a person.

Draft — not yet reviewed

This tool has not yet been signed off by the reviewing practitioner. It is not listed or indexed, and nothing on it should be relied on. The items still to be checked are listed at the bottom of this page.

Before you start

Every question is about one income year, and about your personal services income specifically, not your total business income. The two are not the same and the 80% rule only looks at the first.

We do not ask for your name, your TFN or your figures in dollars, and nothing you type here is stored.

What you earn

Did you earn income from selling or supplying goods?

Physical products or materials with a real cost to you. Ignore ordinary tools of your trade.

Did you earn income from letting, hiring or using an asset you own?

A truck, a machine, a rental property, IP you license. Again, not ordinary tools of trade.

Do employees or subcontractors do a substantial share of the actual client work?

The client-facing work, not admin or bookkeeping.

Is your income a mix of personal services income and other business income?
Putting all of that aside, is more than half of what remains a reward for your own work, skills or expertise?

This is the question Division 84-87 actually asks, and it is why the four above come first.

Your clients

Count a client and its associates as one.

Of your personal services income, not your total income.

%
Are any of your clients related to each other?

Parent and subsidiary, common ownership, or family.

Did any of the work come through an agency or labour hire firm?
How did you mostly win the work?

How you are engaged

Are the terms materially the same across every client?

How you are paid, who supplies the tools, who carries the risk of defects. If they differ, we cannot answer this for a year as a whole.

Are you paid to produce a result, rather than for time worked?
Are you paid hourly, daily or by timesheet?
Do you supply the tools and equipment the work requires?
Does the client provide equipment, software or facilities you use?
Are you liable to fix defects at your own cost?
Is that liability capped, indemnified, or carried by insurance?

Other people

By market value. Not admin, not bookkeeping.

%
Is anyone you employ a spouse or an associate?

Premises

Do you maintain and use separate business premises?

Your structure

Who receives the income?
Do you have a personal services business determination?

A formal determination from the Commissioner, not a self-assessment.

Is this your first year of operation?
Did your structure change part-way through the year?
Is any of the income foreign-source, or from non-resident clients?
Do you run a genuinely separate business alongside this work?

How the tests fit together

Only one of the four has to be satisfied. But the 80% rule sits above three of them: if 80% or more of your personal services income came from one client and its associates, those three are blocked and only the results test, or a determination from the Commissioner, is left.

Results test (s 87-18)
Paid to produce a result, supplying the tools the work requires, and liable to fix defects at your own cost. All three. Tested per contract, which is why we ask whether your terms are the same across every client.
Unrelated clients test (s 87-20)
Two or more unrelated clients, and the work won as a direct result of offers to the public. Both limbs. Word of mouth does not satisfy the second.
Employment test (s 87-25)
Others perform at least 20% of the principal work by market value. An associate doing work that is not part of the principal work does not count.
Business premises test (s 87-30)
Premises you maintain and use, where the work is mainly done, in exclusive use, and physically separate from private premises. All four.

Still to be checked before this page goes live

  • That no Division 84-87 amendment is enacted or sitting in a bill for the 2026-27 income year. Nothing in Division 84-87 is indexed, so this is the only way a constant moves.
  • Every constant read against the current compilation — 50% (s 84-5(1)), 75% (s 87-18(3)), 80% (s 87-15(3)), 20% (s 87-25(1)), two clients (s 87-20(1)(a)) — and the reading saved to a source file.
  • That TR 2022/3 is still the current ruling, since the public offer limb, the tools limb and “mainly” all lean on it.
  • s 87-20(2), the anti-labour-hire carve-out, read directly — the tool forces review on every agency arrangement on the strength of it.
  • The TASA and Code of Professional Conduct wording below, and whether anything here strays from general information toward a tax agent service in substance.
  • Whether refusing to log inputs and outputs is the right call, given the specialist recommended a reliance record. Decided against on 2026-09-04.