Does the PSI 80% rule apply if one client pays most of your invoices?

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Sherry | Senior Accountant

12 August 2025

Overview

One client can account for most of your fees and you can still pass the results test. Check that test first, then work out whether the 80% rule affects your other options.

Knowledge

What is PSI?

Personal services income (PSI) is income earned mainly from an individual’s skills or effort. The results test looks at what you’re paid to deliver, who supplies the necessary tools and who pays to fix mistakes. If 80% or more of your PSI comes from one client and its associates, the 80% rule generally limits which tests you can apply yourself.

Knowledge

What is PSI?

Start with what you sell

One big contract can give you the confidence to go freelance. It can also change how you work out your tax. If most of your fees come from one client, the first question is what they’re paying for. The 80% rule comes later.

Personal services income (PSI) is income earned mainly from one person’s skills or effort. Think of a consultant paid to analyse a client’s sales data. Review each contract. A fee mainly for your own analysis may be PSI, while income from selling a software product can have a different character. Invoicing through a company doesn’t settle that question.

Check the results test first

You can assess this test even with a single client. For at least 75% of your PSI, three things must be true together:

You’re paid to produce an agreed result
You supply the tools or equipment needed for the work
You’re responsible for the cost of fixing defects

Read the agreement alongside what actually happens when a job needs rework.

Say you earn $90,000 of PSI from one client and $10,000 from another. If you don’t pass the results test, receiving 90% from one source generally prevents you from self-assessing under the other three personal services business tests. The threshold includes the client’s associates. If your circumstances warrant it, you can ask the ATO for a determination.

Bring Bon Conseil your contracts, invoices by client and an example of how you handled rework. We can explain which tests apply and what that means for your deductions and the income you report.

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Your business doesn't have to be big to deserve good advice.

Maybe you're a designer working from your spare bedroom. A tradie managing jobs across Melbourne. A consultant with clients around Australia. Or a freelancer wondering what a new gig's agreement means for your tax.

Whatever your work looks like, your finances deserve the same attention as the work you put into your business. We take the time to understand your work, how you’re paid and what your contracts require. We explain the PSI rules in plain language and help you work through the implications for your deductions, income reporting and next contract.

No unnecessary complications. Just practical advice that makes running your own business a little easier.

Keep doing what you do well. We’ll help you understand the tax.

Whether you've just registered your ABN, have a pile of receipts to sort out or are ready to grow beyond a one-person operation, we're here to help.

You don't need to have everything organised before reaching out. Talk to Bon Conseil about your PSI position. We’ll help you work out what applies and what to do next.

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