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personal services income for companies

Discussion in 'Accounting, Tax & Legal' started by chris_qld, 20th Jun, 2012.

  1. chris_qld

    chris_qld Active Member

    Joined:
    21st Jan, 2008
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    Location:
    brisbane
    I'm reading ATO's "Personal Services Income for Companies, Partnerships and Trusts". It says:" the PSI your business received will need to be attributed the people who performed the services (that is, the profits can't be retained in the business).

    My questions are:

    Can a company retain some money for business (cash flow)?

    Thanks in advance.
     
  2. chris_qld

    chris_qld Active Member

    Joined:
    21st Jan, 2008
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    Location:
    brisbane
    The purpose to ask this question is that if I need cash for business in July, if the company has to distribute all the money to me before the 30th June then I have to use my personal post-tax money to run the business in July. It's bit ridiculous and doesn't make sense.
     
  3. Terryw

    Terryw Well-Known Member

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    Sydney
    Hi Chris,

    I don't have any experience in this area, but think the income is only attributed to the person for tax reasons. The company actually earns the income but the ATO takes the person to have earned it and taxes that person.
     
  4. chris_qld

    chris_qld Active Member

    Joined:
    21st Jan, 2008
    Posts:
    44
    Location:
    brisbane
    Thanks Terry.

    Surely if the company keeps some money the company will have to pay 30% tax. Now the problem is whether ATO would consider this as "tax avoidance".