ATO rethink on guidelines for profit allocation within professional firms
In reviewing its guidelines on Everett assignments and the allocation of profits within professional firms, the ATO has become aware that the guidelines are being misinterpreted in relation to certain arrangements that go beyond the guidelines’ scope. The ATO has found a variety of arrangements that exhibit high risk factors are not specifically addressed within the guidelines, including the use of related-party financing and self managed superannuation funds (SMSFs).
As a result, the ATO has suspended the application of the guidelines with effect from 14 December 2017.
Practitioners contemplating entering into new arrangements after the cut-off date should pursue an “early engagement discussion” with the ATO under its private rulings processes.
Practitioners who have entered into arrangements before the cut-off date that comply with the guidelines and do not exhibit high risk factors can rely on those guidelines. Pre-14 December 2017 arrangements that exhibit any of the high risk factors may be subject to review. The ATO says it encourages anyone who is uncertain about how the law applies to their existing circumstances “to engage with us as soon as possible”.
The ATO will consult with interested stakeholders on replacement guidelines and the application of any required transitional arrangements.
If you would like to know more please contact one of our accountants on 07 4639 1099 or come in and see us at 14 Russell Street Toowoomba.