BASIC
CHAPTER 13 Q1 BUSINESS SECTION
S1
The taxpayer is a common law employee, rather than
being genuinely in business. Therefore he does not qualify for the STS.
P1
Personal services income (PSI) |
|
|
Did you receive any personal services income? |
YES |
Read on. |
Part A |
|
|
Did you satisfy the results test? |
NO |
Read on. |
Have you received a PSI business determination? |
NO |
Read on. |
Did you receive > 80% of your PSI from one
source? |
YES |
Go to part B. |
What is personal services income (PSI)?
PSI is when it is the person’s skills and
abilities which are being contracted. The following are NOT PSI:
The results test
For at least 75% of their income:
AND
·
The
taxpayer had to provide his own tools and equipment. Again,
this is how a genuine business operates. An employee uses the tools and
equipment of the employer.
AND
Thus the results test is designed to separate the
genuine businesses from the virtual employees. If ALL the three questions of the
results test are passed, then the income and expenses go at item 14.
Part B
Label O |
|
|
|
45,697 |
Label L |
|
|
|
932 |
|
Internet |
168 |
Home
office |
22 |
|
Stationery |
87 |
Depreciation
|
579 |
|
Repair
to laptop |
76 (378
x 20%) |
|
|
Label A |
|
|
|
44765 |
Not deductible
NOTE: Given the new
treatment whereby D.V. rate is 200% of P.C. rate, it is not to the taxpayer’s
advantage to begin a low value pool.