20/08/2026
What is common amongst a Doctor, IT Consultant or a Lawyer?
They all face a common problem called “PSI”
If you a Medical Practitioner, IT Consultant or Lawyer Working Through a Company or Trust? Don’t Ignore PSI Rules.
One of the most misunderstood areas of Australian tax law is Personal Services Income (PSI). Many professionals establish companies or trusts believing they will automatically receive the tax benefits associated with those structures. Unfortunately, that is not always the case.
If your income is primarily generated from your personal skills, expertise, knowledge, or labour, the ATO may classify it as PSI.
This commonly affects:
✅ Medical Practitioners
✅ IT Contractors & Consultants
✅ Lawyers & Barristers
✅ Engineers
✅ Architects
✅ Other Professional Service Providers
When PSI rules apply, you may be restricted from:
❌ Splitting income with family members
❌ Retaining profits in a company at lower tax rates
❌ Claiming certain business deductions normally available to a business structure
Many professionals are surprised to learn that simply operating through a company or trust does not automatically bypass PSI rules.
The key question is:
Are you genuinely operating a business, or are clients primarily paying for your personal services?
The distinction can have significant tax implications and may affect how income should be reported.
With the ATO continuing to focus on professional services arrangements and contractor structures, it’s worth reviewing your position before lodging your tax return.
If you’re a medical practitioner, IT consultant, lawyer, or other professional operating through a company or trust, now is a good time to ensure your structure remains compliant and tax-effective.
