John Smith is an engineer who provides consulting services through his private company Clean Power Pty Ltd. The company has contracted with the local council for John to provide consulting services in relation to their project works.

The income and expenditure of Clean Power Pty Ltd for 2019/20 was as follows:

• • Fees received from the Council $90,000.
• • Fees received from Dragon Ball Pty Ltd (another customer; local private business) $3,000.
• • Paid John’s salary $60,000.
• • Paid Meredith (John’s wife who does secretarial work for scheduling consulting appointments only) wages $20,000.

John is based at the council offices when conducting his work where all equipment is supplied by the council which also assumes all responsibility for John’s work.

Required

Advise John on the following matters.

1) Whether the PSI provision applies to Clean Power Pty Ltd (you must go through all relevant PSI tests).

2) Tax implication of the receipts by Clean Power Pty Ltd for 2019/20 (who is assessed for the tax liability; what is the amount of taxable income; and what is the tax rate?