PSI rules are the gatekeeper. If you cannot pass the ATO’s tests, a company or trust structure will not save you a dollar in tax. Here is how to navigate them.
By Jonathan Perre, Partner (Tax & Business Services) | Last updated: April 2026
Key Takeaways
- If more than 50% of your OnlyFans income comes from personal skill or appearance, PSI rules apply and income is taxed at your marginal rate regardless of structure
- To unlock a company’s 25% tax rate, you must pass one of four ATO tests: Results, Unrelated Clients, Employment, or Business Premises
- The Employment Test (hiring others for 20%+ of work) is the most achievable path for most OnlyFans creators
- Diversifying income into merchandise, courses, licensing, and IP strengthens your case that the business is more than “just you”
- The wrong structure can cost more in compliance than it saves in tax; get advice before setting anything up
At National Accounts we represent several highly successful content creators in Australia, usually averaging more than $40,000 in net profit per month. While most enjoy lucrative margins, greater control of their time, and the freedom of being their own boss, many face challenges navigating the complex income tax rules that determine whether restructuring from a sole trader actually delivers a tax benefit.
The main barrier is the Personal Services Income (PSI) regime. PSI rules are the catalyst that will determine whether you can feasibly restructure your business. Getting past them can save you tens, if not hundreds of thousands of dollars in income tax, separate your personal legal liability, and create a more commercially appropriate environment for your operations.
What Is Personal Services Income?
The PSI regime, contained in Division 84-87 of the Income Tax Assessment Act 1997 (ITAA 1997), is designed to prevent individuals from reducing tax by diverting income that is mainly a reward for their personal efforts or skills into another entity.
When PSI applies: If more than 50% of your OnlyFans income is from your personal skill, appearance, or labour, it may be classified as PSI. For creators, this is usually the case. Income is attributed back to you personally, even if earned through a company or trust. Deductions may also be limited (you generally cannot deduct rent, mortgage interest, or payments to associates).
When PSI does not apply: If you can demonstrate that your business is more than just “you” (by employing staff, subcontractors, or generating significant non-personal income streams such as licensing, merchandise, or paid collaborations), you may pass the PSI tests and be taxed as a business.
The 4 ATO Tests to Escape PSI
The ATO applies these tests in order. If you pass any one of them, your income is not treated as PSI.
1 Results Test (Primary)
Under s87-18 ITAA 1997, you need to be paid to produce a result (not just for time or effort), provide your own equipment or assets, and be liable for rectifying defective work.
For OnlyFans, this is difficult because payments are tied to subscriptions and personal interaction, not a deliverable “result.” Unless you restructure the offering (for example, commissioned custom content with agreed outcomes), this test usually will not be met.
Difficult for most creators2 Unrelated Clients Test
You receive income from two or more unrelated clients, obtained via advertising or a business website (not via the same platform). OnlyFans usually means all income flows through one platform, so the ATO may argue it is a single client source.
Possible if you diversify platforms3 Employment Test
You employ others (or contract them) to perform at least 20% of the work or 20% of the income is paid to others to help deliver services. For OnlyFans creators, this means hiring content editors, photographers, marketing staff, or managers. The work must be genuinely performed.
Most achievable path for creators4 Business Premises Test
You maintain separate business premises (not your home), used exclusively for business and available to the public. This is rare for an OnlyFans model but possible if set up as a dedicated studio.
Possible with a studio setupHow to Strengthen Your Case
Even if PSI applies, you can still demonstrate that you are carrying on a genuine personal services business (PSB) by meeting the tests above. To build the strongest possible case:
- Use a company or trust structure (required foundation)
- Show commercial risk: marketing spend, subscription churn management, refunds, investments in software, branding
- Employ or contract assistants for editing, admin, marketing, or content creation
- Develop intellectual property: branded content, merchandise, courses, community platforms outside OnlyFans. Income from IP is not PSI
- Show that clients are paying for a business brand and system, not just personal effort
Diversify your income streams. If all income is from OnlyFans, it looks like PSI. If you also sell merchandise, digital products (courses, e-books), license your content or IP, and earn from paid sponsorships or ads, a stronger case exists that you are running a business with income from assets and IP, not just personal services.
Practical steps to move beyond PSI classification:
- Sell branded merchandise, digital courses, subscription tiers with value beyond personal engagement, or license content and IP
- Trademark business names, logos, characters, or storylines. Income linked to IP is not PSI
- Operate social media, websites, or e-commerce outside OnlyFans to show broader business activity
- Engage contractors or employees for at least 20% of work or income (editors, managers, marketers, photographers)
- Source clients outside OnlyFans (Patreon, personal site, sponsorships) to show multiple revenue channels
- Rent a dedicated studio or office separate from your home
Comparing Business Structures
Once you have navigated PSI, here is how the three main structures compare for OnlyFans creators in Australia.
Sole Trader
- Cheapest to set up (register an ABN, get insurance, and you are running)
- No asset protection; personal liability for everything
- No profit sharing; all income taxed at your personal rate
- No ability to retain profits in the business
- Ideal for creators testing the waters or earning under $80,000
Company
- + Favourably taxed at 25% (for base rate entities)
- + Asset protection; separate legal entity
- + Ability to retain profits and pay them out via dividends when suitable
- + Facilitates growth and wealth creation
- – Additional complexity and laws to navigate (Division 7A)
- – Ongoing advisory and compliance costs
- Best for creators earning $80,000-$100,000+ who pass the PSI tests
Trust
- + With a corporate trustee, greater asset protection than sole trader
- + Can share income with eligible beneficiaries (typically yourself and your spouse)
- – No ability to retain profits; must distribute each year
- – Limited tax benefit where taxable income levels are already high
- – Additional complexity and compliance costs
- Best for creators with a spouse or family members who can receive distributions
Important: Always weigh the additional compliance costs against the anticipated tax savings before restructuring. A company or trust that costs $5,000 per year to maintain but only saves $3,000 in tax is not worth it. We model the numbers for every client before recommending a structure change.
Building a Profitable Framework
Beyond choosing the right structure, these operational practices will strengthen your business commercially and protect you if the ATO scrutinises your arrangements.
- Separate business and personal finances. Set up a dedicated business transaction account to receive all income and pay expenses. This is non-negotiable for any structure beyond sole trader.
- Monitor your financials regularly. Review your profit and loss, balance sheet, and cash flow reports frequently. These reports give you visibility over the operational efficiency of your business and its cash position. Cash is always king.
- Protect your IP. Review your trademarks, copyrights, and non-disclosure agreements regularly to ensure your content is protected from unauthorised distribution. Consider content monitoring and takedown services.
- Get ongoing professional advice. An accountant and advisor who understands your business can give you the confidence to make decisions that drive growth, or at the very least, give you peace of mind so you can focus on what you do best.
- Have a plan for your profits. Decide how you will allocate business profits: funding your lifestyle, reinvesting into the business, and building a wealth creation strategy appropriate to your goals. Those who do not plan, plan to fail.
What Successfully Navigating PSI Unlocks
If you pass the PSI tests and restructure into a company or trust, the benefits are significant:
- Separate legal liability from your personal assets
- Facilitate growth and improve commercial viability
- Access the 25% corporate tax rate (for base rate entities) instead of up to 47% at your marginal rate
- Enable profit sharing to your spouse and other contributors
- Create an investment and wealth creation strategy by effectively distributing or reinvesting profits
- Privacy: a company name appears on the ABN register instead of your personal name
Frequently Asked Questions
What is Personal Services Income (PSI) for OnlyFans creators?
Can OnlyFans creators use a company structure to pay less tax?
How do I pass the PSI Employment Test as an OnlyFans creator?
What is the best business structure for OnlyFans in Australia?
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