PSI, PSE and PSB – Get This Right and Pay Less Tax

If your business provides a service, PSI, PSE and PSB are the three most important acronyms for you to pay less tax. In short: If you earn PSI through a PSE that qualifies as a PSB, you pay less tax.

PSI

If you mainly get paid for your efforts and skills, then you earn Personal Services Income aka PSI. Mainly means more than 50%.
But if 50% or more of your income is for other things, for example, the machines you use, then you don’t have PSI from that income source. It is an all-or-nothing approach.

PSE

If your PSI income is paid to another entity, for example, a company or trust, that entity is a PSE, a Personal Services Entity. Any entity that is not an individual and receives PSI is a PSE.

The question is whether this PSE qualifies as a Personal Services Business (PSB). If it does, you will pay less tax.

PSB

PSI is taxed like employment income (unless you qualify as a PSB).

You can’t do much with employment income. You can’t defer or split it. You can’t offset it against losses or claim all the deductions a real business could. 

But as a PSB you can do all that. You get treated like any other real business. So you want to be a PSB, because a PSB means less tax.

Makes sense? Reach out if you need help.

Last Updated on 03 March 2025