Personal Service Income and Trust Losses

Discussion in 'Business Accounting, Tax & Legal' started by JJ1081, 4th Jul, 2017.

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  1. JJ1081

    JJ1081 Active Member

    Joined:
    23rd Feb, 2016
    Posts:
    33
    Location:
    Perth
    Hi There,
    I have family trust where me and my wife both are directors. Trust main business activity is sports and physical recreation instruction. Trust incurred losses for last five years but it is still active. Now I have got contract with mining company as an engineering consultant through my family trust ABN. I understand that it is subject to PSI rules as trust main income is through consulting service. My question is, Can I still offset PSI income with trust losses which accrued for last few years or not at all?
     
  2. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
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    4,579
    Location:
    Sydney
    The problem is that you will be paying tax before the money hits the trust account.

    PSI income is generally subject to PAYG withholding - so your employer will withhold tax and submit it to the ATO (just like they would if you were a regular employee), so any income you receive will be after-tax.

    Now, I'm not sure at that point how it is handled from a taxation perspective - given you've already paid tax, and there are losses carried forward, you would expect that come tax time, you would get a tax refund in the trust for the tax already paid?

    Need one of our accountants or tax experts to chime in here.