The ATO published the ‘Assessing the Risk: Allocation of profits within professional firms’ guidelines and ‘Everett Assignment’ web material in 2015, and said, at that time, they would be reviewed in 2017. In reviewing the guidelines the ATO become aware of situations that had misinterpreted the guidelines or gone beyond the scope of the guidelines.…
We have reported that there has been a lot of activity around the allocation of profits within professional firms, in the last 6 months (December 2017 to May 2018). [See Related TT Article] In the light of this, we thought it worth surveying the types of structures, and some of the history, that gets us to the…
The ATO has established a ‘Professionals Firms’ Working Group’ to consult on what is acceptable, and unacceptable, allocation of profits within professional firms (put bluntly: how much income splitting is ok). This group has been meeting since the Commissioner suspended his guidance, on this subject, on 14 December 2017 [see related TT Article]. This group…
There has been a lot of activity around the allocation of profits within professional firms, in the last 6 months (December 2017 to May 2018). The key events and (where applicable) related Tax Technical articles, are set out below. On 14 December 2017, the Commissioner of Taxation ‘suspended’ (not cancelled) his 2015 guidance on what…
In the 2018 Federal Budget, the Government announced a change to the Small Business CGT Concessions (in Div 152 of the ITAA97) that would adversely affect many partners who ‘alienate’ their partnership income assigning their interest in the professional partnership, to a related entity (and thus ‘split’ what would otherwise be, their income). Such assignments…
On 16 May 2018, the Inspector General of Taxation’s (IGT) announced his investigation into the allegations made during the ABC Four Corners Program (aired on 9 April 2018), regarding the ATO’s use of ‘garnishee notices’. The Program quoted an ATO collections officer and the nub of his allegations was that ATO collections officers, particularly in…
The Victorian Court of Appeal has affirmed a decision that a notice, requiring the taxpayer to lodge his 2010 – 2013 income tax returns, was properly served on him, and that he was, therefore, guilty of an offence (under s8C of the TAA) for failing to lodge those returns. On the facts this was ‘common…
Phoenixing property developers, were a sufficient problem, that Parliament recently legislated a regime that requires purchasers, of certain types of real property, to withhold a GST amount, from the purchase price, and remit it to the ATO. (This applies to certain problem areas: ‘new residential premises’ and ‘potential residential land’ – under new s14-250 of…
In the 2018 Federal Budget, the Government announced it will reform the corporations and tax laws and provide the regulators with additional tools to assist them to deter and disrupt illegal phoenix activity. Illegal phoenixing involves the deliberate misuse of the corporate form by allowing a company to run up debts, the company does not…
In the 2018 Federal Budget, the Government announced it will introduce a measure designed to give recent retirees flexibility to get their financial affairs in order in the transition to retirement. In essence, this means a year when they can still make contributions, even if they are no longer working ‘at least part-time’. This exemption will…