Is disability support work PSI? A guide for NDIS sole traders

Yes. Support work is PSI in most cases. Disability support work income earned as an independent sole trader is classified as Personal Services Income (PSI) by the Australian Taxation Office. That is because it is generated mainly through your personal efforts, skills and time. PSI stands for Personal Services Income, not "personal support income."

This matters because PSI rules restrict the tax deductions you can claim as a sole trader. However, not all deductions are blocked. Insurance costs, work-related travel, uniforms, and training remain deductible under PSI rules. This guide covers how the ATO tests work and what tax deductions you can and cannot claim. It also covers which industry code to use, how contractor platforms differ from employment platforms, and the insurance an independent support worker needs.

Key takeaways

• Support work is PSI for most sole traders. NDIS sole trader income is PSI because it is produced by your personal care skills and physical effort. The ATO classifies it based on how the income is earned, not your business structure.
• The deduction constraint. Failing the ATO's Personal Services Business (PSB) tests means you cannot claim standard business overhead deductions like home office occupancy, rent, or mortgage interest.
• The 80% rule. If 80% or more of your annual care income comes from a single participant or agency, you automatically fail the primary business test.
• Your industry code is not your occupation code. myTax uses a business industry code at "Main business or professional activity", which is different to the occupation code used for salary and wages.
• Zero workplace safety nets. Independent sole traders on ABN contractor platforms are not covered by any employer's workers compensation or liability insurance. You need your own cover.

What is personal services income for NDIS support workers?

Personal Services Income is income that is mainly a reward for your personal efforts or skills, as defined by the Australian Taxation Office. You can earn PSI as a sole trader, or through a company, partnership, or trust.

For disability support workers, the connection is straightforward. When you provide personal care, domestic assistance, community access or behavioural guidance to a participant, you are paid for your time and expertise. That income fits the ATO's definition of PSI.

PSI classification is based on how each contract generates income, not on whether you have an ABN or how your business is structured. Even if you operate through a company, if the income is mainly from your personal efforts, the PSI rules can still apply.

How to work out if your support work income is PSI

The ATO provides a step-by-step framework to assess whether your income is PSI. If it is, the framework then works out whether you qualify as a Personal Services Business (PSB), which removes some of the deduction restrictions.

The headings below use the same wording as the questions in myTax, so you can follow along while you lodge.

Did you receive any personal services income?

Look at each contract individually. If more than 50% of the income under that contract rewards your personal efforts or skills, all income from that contract is PSI. If 50% or less is for personal efforts, none of it is PSI.

For most disability support workers billing hourly rates for hands-on care, the answer is clear. The income is almost entirely a reward for your personal labour, so it is PSI.

Did you satisfy the results of the test?

This test determines whether your PSI qualifies as a Personal Services Business. To pass, you must meet all three criteria at the same time. You are paid to produce a specific result rather than by the hour. You provide your own tools and equipment. And you are liable for rectifying defects in your work at your own cost.

Most NDIS support workers are paid per hour or per shift, not per result. This means most fail the results test, and their income remains subject to PSI rules.

Did you receive 80% or more of your PSI from one source?

If you did not pass the results test, check whether 80% or more of your PSI comes from one client and their associates. If it does, you generally cannot self-assess as a Personal Services Business. That rules out the unrelated clients, employment and business premises tests. You may need to apply to the ATO for a PSB determination.

Did you satisfy the unrelated clients, employment or business premises test?

If less than 80% of your PSI comes from one client, you may be able to self-assess against the remaining PSB tests.

• Unrelated clients test. You regularly advertise and seek work from the public.
• Employment test. You employ others to do at least 20% of the work.
• Business premises test. You maintain separate business premises used mainly for work and not shared with a client.

Passing any one of these tests may qualify your income as a Personal Services Business, removing the PSI deduction restrictions. If you are unsure, confirm your position with a registered tax agent.

What industry code do I use as a support worker?

This trips up more sole traders than the PSI tests do, because the tax return asks for two different codes in two different places.

Main business or professional activity. This is the business industry code, based on the Australian and New Zealand Standard Industrial Classification. It appears in the business and professional items section of myTax when you have sole trader income. The ATO publishes a business industry code tool that lets you search by keyword or code number. Enter the description the tool returns. It comes as a number followed by a description.

Occupation code. This is a different code, used at the salary or wages item if you are also employed. If you work both as a sole trader and as an employee of a provider, you will complete both, and they will not match.

Two practical points. There is no single code labelled "disability support worker" or "aged or disabled carer". You choose the closest available description for the services you actually deliver. Second, the code should reflect your main business activity. If you deliver several service types, choose the one that generates most of your income.

The ATO also publishes an occupation guide for community support workers and direct carers. It covers income, allowances and work-related deductions. Worth reading alongside the PSI rules, since the two cover different parts of the same return.

What tax deductions can a support worker claim under PSI rules?

If the PSI rules apply to your income, some deductions you might expect to claim as a sole trader are blocked. Others remain available.

What you can still deduct

Even under PSI rules, you can deduct expenses that are directly connected to earning your income. These include:

• Work-related travel and car expenses, meaning travel between participants rather than commuting from home to a regular workplace.
• Required uniforms, high-visibility clothing, and personal protective equipment such as gloves, sanitisers, and disposable aprons.
• Training courses, first aid certifications, NDIS worker screening checks, and professional development directly related to your care work.
• Phone and internet expenses used for work, limited to the work-related portion.
• Insurance costs for public liability and professional indemnity. These are directly connected to producing your assessable income under section 8-1 of the Income Tax Assessment Act 1997. Confirm deductibility with a registered tax agent.

What you cannot deduct

Under PSI rules, you cannot claim:

• Rent, mortgage interest, or council rates on your home, even if you do admin work from home.
• General home office occupancy expenses.
• Payments to an associate, such as a spouse or family member, for administrative or bookkeeping work. The exception is work that would otherwise need an outside provider.
• Entity maintenance costs for a company or trust structure set up mainly to receive your PSI.

The distinction is practical. Expenses directly tied to doing the care work remain deductible. Expenses related to running a business structure or maintaining a home office are restricted.

Independent contractor or employee: where PSI overlaps with sham contracting

Not every NDIS support worker is a sole trader. The platform you work through determines your employment status, your tax treatment, and whether PSI applies at all.

Contractor platforms and employment platforms

Some NDIS platforms operate as ABN contractor marketplaces. On these platforms you generally use your own ABN, set your own rates, manage your own tax, and arrange your own insurance. Income earned this way is your sole trader business income and is subject to PSI rules.

Other platforms engage support workers directly as casual employees. In that model, tax is withheld from your pay and superannuation is paid on your behalf. You also sit under the platform's workers compensation arrangements. Income earned as an employee is salary or wages, not PSI, so the PSI rules do not apply.

Platform models change, so confirm your employment status directly with the platform you work through before assuming your income is PSI.

The sham contracting warning

Some businesses ask workers to get an ABN and invoice as contractors. This avoids paying superannuation and other employment entitlements. If someone controls your hours, provides your tools and directs how you work, you may be an employee rather than a contractor. The ATO and the Fair Work Ombudsman actively investigate sham contracting arrangements.

Superannuation rules and expectations

The superannuation guarantee applies to employees, not to sole traders invoicing their own clients. If you are employed, even as a casual, your employer must pay the super guarantee on all your ordinary time earnings. It applies from the first dollar. The rate has been 12% since 1 July 2025, with no minimum earnings threshold.

If you are a sole trader, you are not legally required to pay yourself super, but you can choose to contribute voluntarily. However, a hiring business may still need to pay super on your behalf. That applies where it engages you mainly for your personal labour, rather than for a specific business result. This falls under the ATO's expanded definition of "employee" for super purposes. Confirm your specific position with a registered tax agent.

What insurance do independent NDIS support workers need?

When you work as a sole trader through an ABN contractor platform, no employer policy sits behind you. That means no public liability, professional indemnity or personal accident cover. If something goes wrong on the job, the liability sits with you personally.

What insurance costs for an independent support worker

Most disability support workers pay between $457 and $684 a year for combined professional indemnity and public liability cover. The typical cost is around $515. On a monthly plan, most pay between $40 and $51 a month, with a typical instalment of around $43. That is based on over 2,700 policies reviewed, arranged between 2022 and 2026.

Two things worth knowing. Around seven in ten disability support workers pay by monthly instalment rather than annually. And the gap between the two is small. Paying across twelve months worked out roughly $7 more over the year than paying upfront, which is a much narrower gap than most trades show.

Figures include stamp duty and fees, so nothing needs to be added on top. Annual and monthly plans are different groups of policies, so the monthly figure is not the annual figure divided by twelve.

For the full breakdown, see how much does NDIS support worker insurance cost.

Public liability insurance for physical risks

Public liability insurance may respond if someone is injured while you provide services, or if you damage a third party's property. This is relevant if you assist with physical transfers, work inside participants' homes, manage community access outings or handle mobility equipment.

Scenario: the patient transfer injury. An independent support worker is assisting a participant with a hoist transfer from a wheelchair to a bed. During the transfer the worker loses grip and the participant falls, sustaining a hip injury. The participant makes a claim for medical costs and rehabilitation. Public liability insurance may respond to claims arising from accidental third-party injury during the provision of care services, subject to policy terms. Illustrative scenario only. Cover depends on the terms of the individual policy.

Professional indemnity insurance for clinical advice

Professional indemnity insurance may help protect you if a participant claims your professional service or advice caused them harm. This is relevant if you manage medication schedules, implement behavioural support plans, or provide nutritional or lifestyle guidance.

Scenario: the medication scheduling error. An independent support worker manages a participant's daily medication routine. The worker administers the wrong dosage at the wrong time due to a scheduling misread. The participant suffers an adverse reaction and the family makes a formal claim alleging negligent care. Professional indemnity insurance may respond to claims arising from errors in the provision of professional services, subject to policy terms. Illustrative scenario only. Cover depends on the terms of the individual policy.

Many NDIS participants, plan managers and platforms ask for a valid Certificate of Currency before engaging a sole trader. For the full guide to requirements, see does a disability support worker need public liability insurance. For cover options by role, see what insurance do disability support workers need.

How upcover arranges insurance for NDIS sole traders

upcover is a digital-first insurance broker helping Australian sole traders and small businesses arrange cover online. upcover arranges public liability and professional indemnity insurance for independent NDIS support workers, with access to 80+ insurance partners.

• 70,000+ businesses covered across Australia
• 4.9/5 customer rating
• Instant Certificate of Currency on policy confirmation

Get a quote through the sole trader insurance page, or see support worker insurance for cover options.

upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

Frequently asked questions

Is independent disability support work always considered PSI?

In most cases, yes. If more than 50% of the income you earn under a contract is a reward for your personal efforts and skills, all income from that contract is PSI. Because disability support work is almost entirely performed through personal labour, the income typically qualifies as PSI under ATO rules.

What industry code do I use as a disability support worker?

Use the ATO's business industry code tool to find the closest description for the services you deliver, then enter that description at "Main business or professional activity" in myTax. There is no single code named for disability support work, so pick the closest match to your main activity. This is a different code to the occupation code used for salary and wages.

Is disability support work personal services income?

Yes, in most cases. Support work is PSI because the income mainly rewards your personal effort and skill rather than a business structure, assets or employees. This applies whether you invoice participants directly, work through a plan manager, or take bookings through a contractor platform.

Can an NDIS sole trader claim travel and car expenses under PSI rules?

Yes. Travel between participants and work-related car expenses remain deductible under PSI rules, as they are directly connected to earning your income. Commuting from home to a regular workplace is not deductible. The ATO allows either the cents-per-kilometre method or the logbook method for calculating car deductions.

What happens if 80% or more of my income comes from one participant or agency?

If 80% or more of your PSI comes from one client and their associates, and you have not passed the results test, you generally cannot self-assess as a Personal Services Business using the remaining PSB tests. You may need to apply to the ATO for a PSB determination. Diversifying across multiple participants or plan managers is the most practical way to avoid this restriction.

How much does insurance cost for a sole trader support worker?

Most pay between $457 and $684 a year for combined professional indemnity and public liability cover, with a typical cost of around $515. On a monthly plan, most pay between $40 and $51 a month. Figures include stamp duty and fees. Your own cost depends on turnover, the services you deliver and your cover level.

Do platforms provide public liability insurance for sole traders?

Some platforms arrange group insurance covering support workers for sessions booked and invoiced through the platform. Where that applies, the cover generally extends only to platform-arranged work. Private client arrangements outside the platform are usually not covered, and a group policy may have limitations that differ from a standalone policy. Sole traders who take on clients both through a platform and directly commonly arrange their own policy to cover all activities. Check the terms with your own platform.

Note: since 1 July 2026, NDIS digital platform providers must be registered with the NDIS Quality and Safeguards Commission. The requirement was introduced under the National Disability Insurance Scheme (Provider Registration and Practice Standards) Amendment (Mandatory Registration and Other Matters) Rules 2026, alongside supported independent living providers. Check your platform's registration status if you rely on it for work.

Can I deduct insurance costs under PSI rules?

Yes. Public liability and professional indemnity insurance costs are deductible under section 8-1 of the Income Tax Assessment Act 1997 if the policy is directly connected to earning your assessable income. This deduction remains available even when PSI rules restrict other business expenses.

What is the difference between PSI and PSB?

PSI is the default classification for income from your personal efforts. PSB is a status you achieve by passing ATO business tests, being the results test, the 80% rule, the unrelated clients test, the employment test, or the business premises test. If you qualify as a PSB, the PSI deduction restrictions do not apply and you can claim the full range of business deductions.

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_{The information in this article is general in nature and provided for informational purposes only. It does not constitute personal tax, legal, or insurance advice. References to Personal Services Income rules, ATO tests, business industry codes, tax deductions, superannuation rates, and platform employment models are based on publicly available information current at the time of writing and can change. Always confirm your specific tax position with a registered tax agent or the Australian Taxation Office. Cost figures are based on disability support worker policies reviewed, arranged between 2022 and 2026, written on a bundled professional indemnity and public liability product. They are the total amount payable, including stamp duty and fees. Annual-plan and monthly-plan figures describe different groups of policies. A small number of very low or very high policies sit outside these ranges and are not representative. They are indicative only and do not constitute a quote. All insurance products arranged through upcover are subject to the terms, conditions, limits and exclusions contained in the relevant policy wording and Product Disclosure Statement. Before deciding whether a particular insurance product is right for you, please read the relevant PDS and consider your personal circumstances. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}