Pam Accounting Pty Ltd is a private family company receiving $ 150,000 per year for fees for providing accounting compliance services.

All the accounting services are provided by Pam in her roles as director and employee of the company. Pam's husband Greg is also an employee and performs secretarial works such as answering phones Pam is paid a salary of $50 000 and Greg receives a salary from Pam Accounting of $20 000 with Pam Accounting assessed on the balance.

The accounting services involve lodging monthly BAS and other compliance requirements for his clients. Pam visits each business and uses their software and computer system to lodge the compliance requirements and her company are responsible for any mistakes in the process.

 

Pam Accounting Pty Ltd has three clients. (1) Barry & Wheel Pty Ltd; (2) Barry Pty Ltd; and (3) Wheel Pty Ltd.

• Barry provides 55% of the work
• The wheel provides 30% of the work
• Barry and Wheel provides the balance
• Barry Pty Ltd owns all of the shares in Wheel Pty Ltd.

Pam also uses a small office in Barry & Wheel's building to complete the activities.

Pam Accounting invoices and receives fees from all three clients separately.

 

Required

1. Determine whether the income described would be classified as personal services income. 
2. Clearly apply All PSI steps to the facts above and determine how the PSI rules apply to Pam's Accounting 
3. Explain the tax outcome assuming Pam Accounting is a PSE (Personal Services Entity) and contrapt the tax outcome if Pam Accounting is a PSB (Personal Services Business)