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Allocation of professional firm profits: part 1


The Commissioner of Taxation issued PCG 2021/4 on 16 December 2021. The guideline is concerned with inappropriate tax outcomes arising from the allocation of profits from professional firms. It is essentially a targeting system, setting out a risk assessment framework by which the Commissioner will judge who within the applicable industries will likely be subject to further analysis and possibly audit, and who will not. Part 1 of this article starts with a brief background on the history of the tax technical matters underlying PCG 2021/4. It then covers the qualifying criteria that must be satisfied in order to rely on the guideline’s risk assessment framework, and what happens when they are not satisfied. Part 2 will cover PCG 2021/4’s risk assessment framework, the scoring system, and the transitional arrangements with suspended guidelines from 2015.

Author profile

David Montani CTA
David is Nexia Australia’s National Tax Director, providing tax technical and strategic support to Nexia offices across Australia. Prior to commencing this role in 2019, David had 26 years of experience in taxation and business advisory, with the last 15 years in specialist taxation consulting, leading Nexia Perth's Tax Consulting Division. Particular areas of specialty include business restructures, property transactions, Capital Gains Tax, Division 7A and business sales. David's approach is to deliver solutions-based outcomes that assist clients in making important decisions concerning their businesses. - Current at 22 October 2020
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