Settling on an appropriate structure for a professional practice requires considerable care to ensure the practices commercial and practical requirements are met and that the legal and tax implications are understood.
As we await further guidance from the Australian Taxation Office (ATO) on the tax implications, there remain areas of uncertainty and high tax complexity that must be considered.
This paper explores drivers for professional practice structuring and restructuring, some of the overarching tax considerations associated with the same, and the associated opportunities, tricks and traps to be aware of when advising clients. In the absence of updated ATO guidance being released at the time of writing, this paper includes a section exploring tricks and traps in the context of the reasons for the withdrawal of the publication, ‘Assessing the risk: allocation of profits within professional practices’ (Guidelines) as the best indicator of the current areas of ATO focus.
Hopefully when released the updated ATO guidance will provide much greater clarity on the tax issues that remain uncertain.