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Personal Service Income and retention

Discussion in 'Accounting, Tax & Legal' started by chris_qld, 23rd May, 2009.

  1. chris_qld

    chris_qld Active Member

    21st Jan, 2008
    I earn PSI through my company (sole director), and I can't retain any profit in the name of the company by the end of the financial year. I wonder how I calculate this financial year's "profit". Late last year the company bought some shares as a long term investment. Let's say, the totally PSI is $100,000 (in company's name). The company spent $30,000 to buy shares. The "profit" should still be $100,000 or $70,000 ($100,000 - $30,000)?
    Thanks in advance for your input
  2. Superman

    Superman Well-Known Member

    6th Nov, 2007
    Gold Coast, QLD
    Hi Chris,

    The $30k investment in shares is a capital investment, it is not an expense or a deduction against the income earned. It will not directly impact on your PSI income, however any dividends received by the company will also not be PSI income.

    I have attached some information regarding Personal Services Income that will likely be relevant to you.

    This time of the year you should be talking to your accountant and estimating how much tax you will be paying, and seeing if you can do anything to reduce it (i.e. tax planning).

    Also, it is probably not a good idea to have assets (including shares) held by the same company that you trade through as it puts them at risk if the company is sued / attacked - but this is a whole other topic.

    Feel free to contact me if you want more information.

    Attached Files: