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Allocation of professional firm profits: part 2


Part 1 of this article was prefaced with the longstanding dichotomy between income derived from property and income derived from an individual’s personal services. This formed the background leading to the Commissioner of Taxation issuing PCG 2021/4, concerned with professional firm profits possibly being insufficiently attributed to practitioners whose personal efforts contributed to the derivation of the profit. Part 1 went on to cover when an affected taxpayer qualifies to rely on PCG 2021/4, and their situation when they don’t. In part 2, we move on to PCG 2021/4’s risk assessment framework, the scoring system, and the transitional arrangements with suspended guidelines from 2015. All of this leads into how we can assist clients in the applicable industries (and ourselves) to make key decisions that will determine whether they will be in the crosshairs of this targeting system for ATO compliance reviews.

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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