# Australia Sole Trader Consultant ATO PSI & ABN Invoice

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- **Jurisdiction / Region:** AU
- **Last Verified:** Mon Nov 09
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- **Summary:** Sole trader management consultant ato personal services income psi invoice guide: Results Test, 80% rule, $75,000 GST, $20,000 write-off, 88c/km & $0 app.

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# Australia Sole Trader Management Consultant, Business Coach & Freelance Strategist Guide: Sole Trader Management Consultant, ATO Personal Services Income (PSI), ABN Invoice & GST Rules (2026)

**Short answer: Under Australian Taxation Office (ATO) Division 84–87 ITAA 1997 rules, this sole trader management consultant ato personal services income psi guide covers three critical rules: passing the 75% Results Test (or the 80% + Unrelated Clients Test) qualifies you as a Personal Services Business (PSB) with full deductions, GST registration starts at $75,000 turnover, and every $100 in unrecorded receipts costs $32 to $47 in ATO tax.**

> **⚡ Instant Australian Consultant & Coach (`ATO PSI` / `ABN` / `BAS`) Invoice + Deduction Toolkit (`$0/Mo` — 100% Unlimited):** Generate compliant `Tax Invoices` with your `11-digit ABN` and `10% GST` (or `No GST`) in the **[Free Australian ABN Invoice Generator](/keel/invoice-generator/)** and **[Australian GST & BAS Calculator](/keel/australia-gst-calculator/)** (or click **🔗 Embed / CSV Template**), email **mert@usekeelapp.com** for **Free `.keel` Data Setup**, explore the **[Australian Sole Trader & Tradie App Store Edition](/keel/cpp/australia-nz-sole-traders/)**, or **[Download Keel on the App Store (`$0/mo` Core — 100% Unlimited)](https://apps.apple.com/us/app/keel-invoice-maker-receipts/id6786659713?ppid=8470921a-830e-47a3-abf5-bf0b1cce24ac&pt=127772795&ct=blog_vergi_au-consultant-ato-psi-abn-gst&mt=8)** (`au-nz-tradies`).

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## How do the sole trader management consultant ato personal services income psi rules work in 2026?

If you work as an independent management consultant, strategy advisor, IT/project management consultant, HR advisor, marketing strategist, or executive coach in Sydney, Melbourne, Brisbane, Perth, or Adelaide under an **Australian Business Number (`ABN`)**, more than `50%` of each invoice you issue comes from your **personal skills, knowledge, or expertise**. Under **Divisions 84–87 of the Income Tax Assessment Act 1997 (`ITAA 1997`)**, the [Australian Taxation Office (ATO)](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/personal-services-income) classifies that revenue as **Personal Services Income (`PSI`)**.

Here is the crucial distinction most Australian consultants miss: **earning PSI does NOT automatically restrict your tax deductions—provided you qualify as a Personal Services Business (`PSB`)** by passing the ATO's statutory tests!

### How to pass the ATO Personal Services Business (`PSB`) self-assessment tests (`TR 2022/3`):
1. **Step 1 — The Results Test (The Gold Standard — Works Even If `80%+` of Your Income Comes From 1 Client!):** You automatically qualify as a **PSB** (meaning **PSI restrictions do NOT apply**!) if, for **at least `75%` of your PSI** during the income year, you meet **all three conditions**:
   - **Paid to produce a specific result/outcome:** Your contract and invoices bill for defined milestones, deliverables, or project outcomes (or fixed-scope retainers), rather than pure employee-style time-sheets;
   - **Provide your own equipment/tools:** You supply your own MacBook/laptop, software stack, and office equipment (where required for the work); AND
   - **Liable to rectify defects at your own cost:** If a deliverable is defective, you must fix it in your own time without billing extra hours.
2. **Step 2 — The `80%` Rule + Secondary PSB Tests:** If you don't meet the Results Test on `75%` of your income, check whether **less than `80%` of your PSI** comes from any single client (including their associates). If **under `80%`** comes from one client, you qualify as a **PSB** by passing **just one** of the remaining three tests:
   - **Unrelated Clients Test:** You provide services to **2 or more unrelated clients** as a direct result of making offers/advertising to the public (such as having a public consultancy website, LinkedIn Services profile, or competitive tender bids).
   - **Employment Test:** You engage subcontractors or employees to perform at least `20%` (by market value) of the principal work.
   - **Business Premises Test:** You maintain dedicated commercial premises separate from your home and your client's offices.

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## What can an Australian sole trader consultant claim on their ATO tax return (`PSB` vs `PSI-restricted`)?

Because of **Loss Aversion ($\lambda \approx 2.25$)**, every **`$100 AUD` in unlogged software, travel, insurance, or WFH expenses** costs an Australian consultant **`$32.00` (`$45k–$135k` bracket), `$39.00` (`$135k–$190k` bracket), or `$47.00` (`$190k+` bracket including the `2%` Medicare Levy)**—plus **`$10.00` in unclaimed GST Input Tax Credits on your BAS**!

| Consultant & Coach Expense | Deductible if `PSB` (Results / Unrelated Clients Test Passed)? | Deductible if `PSI` Rules Apply (Failed PSB Tests)? | 2025–26 ATO Statutory Rate & Rule |
|---|---|---|---|
| **Professional Indemnity (`PI`) & Public Liability insurance, CPA/tax agent fees, ASIC business name & bank/Stripe fees** | **100% Yes** | **100% Yes** | Fully deductible regardless of PSI status (`ITAA 1997 s. 85-10`) |
| **MacBook Pro, iPad, iPhone, 4K monitor, ergonomic chair & desk (`$20,000` Instant Asset Write-Off)** | **100% Yes** | **100% Yes** (for tools used to generate PSI) | **100% immediate write-off** for eligible assets costing **under `$20,000` (ex-GST)** each; items **`$300 or less`** written off immediately |
| **Software (`Microsoft 365`, `Xero`/`Keel`, `Miro`, `Slack`, `Zoom`, `LinkedIn Sales Navigator`, `ChatGPT`/`Claude`), mobile & NBN internet (business %)** | **100% Yes** | **100% Yes** | Apportion business-use percentage via a 4-week representative diary |
| **Working from home (`67¢/hour` ATO Fixed Rate or Actual Cost Method — electricity, gas, home internet, phone, stationery)** | **100% Yes** | **100% Yes** (*running expenses* are allowable even under PSI!) | **`67 cents per hour` worked from home (`PCG 2023/1`)**—requires a contemporary record of hours worked from home |
| **Business car travel between client sites (`88¢/km` up to `5,000 km` or Logbook Method) + interstate client flights & hotels** | **100% Yes** | **100% Yes** (for client-site travel; *not* home-to-single-permanent-workplace commuting) | **`88 cents per business km` (`$4,400` max claim for `5,000 km` per vehicle)** without receipts, or `12-week` Logbook % |
| **Occupancy expenses (`%` of home rent, mortgage interest, council rates & home insurance) + Payments to a spouse/associate for admin support** | **Yes** (if home is a place of business with no alternative office) | **No** (`ITAA 1997 s. 85-15 & s. 85-20` block home occupancy & associate admin payments if PSI rules apply) | Passing the **Results Test or Unrelated Clients Test (`PSB`)** unlocks non-principal subcontractor deductions |

Check [Australia Sole Trader Expenses and Receipts](/keel/australia-sole-trader-expenses-receipts/) and [Australia BAS Due Dates](/keel/australia-bas-due-dates/) for quarterly BAS calendars.

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## How do you structure an Australian consultant `Tax Invoice` (`11-digit ABN`, `47%` no-ABN withholding & `$75,000` GST)?

1. **Always display your `11-digit ABN`:** Under **TAA 1953 s. 12-190**, if you bill an Australian business client without quoting a valid **11-digit ABN**, the client is legally required to **withhold `47%` of your invoice** and send it to the ATO!
2. **Under `$75,000` Annual Turnover (Not GST-Registered):** Title your bill **`"Invoice"`** (never *"Tax Invoice"*), charge `$0` GST, and include the line: **`"No GST has been charged (not registered for GST)"`**.
3. **`$75,000+` Annual Turnover (or Voluntarily GST-Registered):** Title your bill **`"Tax Invoice"`**, display your ABN, itemize deliverables, and state either **`"Includes GST of $X.XX"` (`1/11th` of total)** or show the ex-GST fee + **`10% GST`** separately. (Note: consulting services exported to **overseas US/UK/SG clients** used outside Australia are **GST-free (`0%` GST) under `GSTR 2003/7` & `s. 38-190 GST Act 1999`**, while still letting you claim `100%` GST credits on your Australian business purchases!)
4. **Results-Test Friendly Wording:** Frame invoice line items around **deliverables and fixed milestones** (*"Phase 1 Operating Model Diagnostic & Board Report — Milestone Deliverable 1"*) rather than *"40 hours worked Mon–Fri"*.

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## Should an Australian sole trader consultant make concessional superannuation contributions (`$30,000` cap)?

Unlike employees, Australian sole trader consultants do not receive compulsory `12%` Super Guarantee from clients (unless contracted principally for personal labour under `s. 12(3) SGAA 1992`). However, making a **personal concessional superannuation contribution** (up to the **`$30,000` annual concessional cap**) and lodging a **Notice of Intent to Claim a Deduction (`NAT 71121`)** with your super fund before lodging your tax return taxes that contribution at **`15%` inside super** instead of your **`32% to 47%` marginal ATO rate**!

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## Worked example: How much ATO tax & GST does a Melbourne management consultant save on `$145,000 AUD`?

Suppose an independent Melbourne strategy consultant bills **`$145,000 AUD` (ex-GST)** across 3 corporate clients (passing both the **Results Test** and the **`<80%` Unrelated Clients Test** as a **PSB**):
- **Gross Consultancy Income (ex-GST):** **`$145,000 AUD`**
- **Allowable ATO Deductions (`$21,460 AUD` ex-GST) + `$1,680` BAS GST Credits:**
  - **MacBook Pro M4 Max (`$4,450` ex-GST) + 4K Studio Monitor (`$1,818` ex-GST) under `$20,000` Instant Asset Write-Off:** `$6,268`
  - **Business Car Travel (`3,800 km @ 88¢/km`) + Sydney/Brisbane Client Flights & Hotels:** `$5,944`
  - **Working From Home (`1,650 hours @ 67¢/hr` Fixed Rate) + Dedicated Coworking Passes:** `$2,955`
  - **Software (`M365`, `Miro`, `LinkedIn Sales Navigator`, `Claude`, `Zoom`), PI Insurance (`$10m` cover) & Tax Agent Fee:** `$4,293`
  - **Concessional Personal Superannuation Contribution (`s. 290-150` Notice of Intent):** `$2,000` (additional top-up)
- **Taxable Income:** `$145,000 - $21,460 =` **`$123,540 AUD`**
- **Total ATO Income Tax (`30%` + `2%` Medicare + `37%` top slice avoided) + BAS GST Saved:** **`$8,805 AUD`** kept in your pocket!

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## Frequently asked questions

**What is PSI (Personal Services Income) according to the ATO?**
Under **Division 84 ITAA 1997**, **Personal Services Income (`PSI`)** is income where **more than `50%` of the amount on the invoice is a reward for your personal efforts, skills, or expertise** (such as management consulting, coaching, IT contracting, engineering, or copywriting), rather than the sale of goods or use of heavy income-producing assets.

**Did you satisfy the Results Test for PSI, and why does it matter?**
You satisfy the **ATO Results Test (`s. 87-18 ITAA 1997`)** if, for at least **`75%` of your PSI**, you are paid to achieve a **specified result/deliverable**, you provide your own **laptop/tools of trade**, and you are **liable for the cost of rectifying defects**. Satisfying the Results Test makes you a **Personal Services Business (`PSB`)**, which exempts you from PSI deduction restrictions even if `100%` of your consulting income comes from one major client!

**What is the tax-free and GST threshold for a sole trader in Australia in 2026?**
For Australian tax residents, the **income tax-free threshold is `$18,200`** (with the `$16%` bracket applying from `$18,201 to $45,000` under the Stage 3 tax cuts), while the **mandatory GST registration threshold is `$75,000` in annual GST turnover** over any 12-month period.

**What can an Australian sole trader consultant claim as a tax deduction?**
Sole trader consultants can claim **`88 cents per km` for business car travel (up to `5,000 km`), `67 cents per hour` for working from home, `100%` instant asset write-offs for laptops, phones, and office furniture under `$20,000`, Professional Indemnity (`PI`) and Public Liability insurance, software subscriptions, interstate client flights/hotels, CPD courses/conferences, tax agent fees, and personal concessional super contributions (up to the `$30,000` annual cap)**.

**Do Australian consultants charge 10% GST to US, UK, or Singapore clients?**
No. Under **section 38-190 of the GST Act 1999** (`GSTR 2003/7`), management consulting, strategy, coaching, and digital services supplied to a **non-resident client who is outside Australia when the service is performed** (and not directly connected with Australian real property) are **GST-free (`0%` GST)**—and you still claim `100%` GST credits on your Australian business expenses on your BAS!

**How do I issue Australian ABN Tax Invoices and track BAS / PSI receipts for $0/month on iPhone?**
Download **[Keel on the App Store (`$0/mo` Core — 100% Unlimited)](https://apps.apple.com/us/app/keel-invoice-maker-receipts/id6786659713?ppid=8470921a-830e-47a3-abf5-bf0b1cce24ac&pt=127772795&ct=blog_vergi_au-consultant-ato-psi-abn-gst&mt=8)**—no trial timer, no credit card, and no mandatory bank feed (*you are completely free to keep using Excel, or email **mert@usekeelapp.com** and we will migrate your existing ABN invoices and BAS logs into `.keel` format for `100% Free`*!).

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*Last verified November 9, 2026 against ATO Ruling TR 2022/3 (Personal Services Income), PCG 2023/1 (Working From Home 67c/hr), and ITAA 1997 Divisions 84–87.*