ATO Update: Profit allocation within professional firms

As you may be aware, the ATO withdrew its previous guidelines (published in 2015) on 14 December 2017 as a consequence of becoming aware of arrangements that went beyond the scope of those guidelines.

The ATO has been undergoing consultation with the tax profession since January 2018 with the aim of providing new guidance. In light of this and to provide certainty for taxpayers for the year ended 30 June 2018:

  • For arrangements entered into prior to 14 December 2017 and which generally comply with the previous guidelines, such taxpayers can rely on those previous guidelines (and those that met one of the three benchmarks, such an arrangement will be considered low risk).
  • Professionals entering into new arrangements after 14 December 2017, or those that have high-risk factors within existing arrangements, are being encouraged to engage with the ATO to assess their risk and obtain certainty as to the validity of the treatment adopted.

If you have any concerns into any arrangement, please contact Daryl Jones at djones@hlbqld.com.au.