Hot Issues
spacer
Small businesses may ‘collapse under strain of payday super’, IPA warns
spacer
ATO’s hands tied with scrapping on-hold debts, expert says
spacer
What Drives Your Business Growth and Profits?
spacer
Australian Taxation Office (ATO) shifting to firmer debt collection activity
spacer
Why employee v contractor comes down to fine print
spacer
Sharing economy reporting regime for platform operators
spacer
Countries producing the most solar power by gigawatt hours
spacer
Illegal access nets $637 million
spacer
Accessing superannuation benefits.
spacer
Does your business have a company Power of Attorney?
spacer
Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
spacer
GrantConnect
spacer
2 in 3 SMEs benefit from instant asset write-off, survey reveals
spacer
Updated guidance on R&D claims
spacer
Do you know how to recover debts?
spacer
Wheat Production by Country
spacer
Types of small business benchmarks
spacer
What is a Commercial Lease?
spacer
ATO warns advisers against suspect R&D tax claims
spacer
The year of workplace law upheaval
spacer
How to Resolve Invoice Payment Disputes
spacer
Raft of revenue tweaks in MYEFO to raise millions
spacer
The Countries that Export the Most Wine in the World
Article archive
spacer
Quarter 4 October - December 2023
spacer
Quarter 3 July - September 2023
spacer
Quarter 2 April - June 2023
spacer
Quarter 1 January - March 2023
spacer
Quarter 4 October - December 2022
spacer
Quarter 3 July - September 2022
spacer
Quarter 2 April - June 2022
spacer
Quarter 1 January - March 2022
spacer
Quarter 4 October - December 2021
spacer
Quarter 3 July - September 2021
spacer
Quarter 2 April - June 2021
spacer
Quarter 1 January - March 2021
spacer
Quarter 4 October - December 2020
spacer
Quarter 3 July - September 2020
spacer
Quarter 2 April - June 2020
spacer
Quarter 1 January - March 2020
spacer
Quarter 4 October - December 2019
spacer
Quarter 3 July - September 2019
spacer
Quarter 2 April - June 2019
spacer
Quarter 1 January - March 2019
spacer
Quarter 4 October - December 2018
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
Quarter 1 of, 2021 archive
spacer
ATO’s good-faith approach to crypto won’t last much longer
spacer
‘Much more complex’: ATO introduces new partnership profit guidelines
spacer
Cost of retirement up in December quarter
spacer
Contributing to Superannuation
spacer
ATO tipped to pounce once JobKeeper ends
spacer
What’s Happening to Small Business Loans in Australia?
spacer
ATO Revs Up As JobKeeper Set To End In March 2021
spacer
Small businesses urged to register assets before insolvency explosion.
spacer
ASIC sounds warning around high-yield bond scams
spacer
JobMaker Resources - ATO
spacer
Government mulls HECS-style business loans
spacer
Industry pressure forces ATO’s hand on STP deadline
spacer
$36bn withdrawn from super during COVID-19
spacer
ATO opens claims for first JobMaker quarter
spacer
Vaccination rates as they happen around the world
spacer
Toyota returns $18m in JobKeeper payments
spacer
Approaching the dawn
spacer
Videos and other resources for our clients
spacer
Brazen ATO scam costs Sydney woman $22k
spacer
Key dates for the second JobKeeper extension period
spacer
Returning expats reminded on tax snares with pensions, investments
spacer
80¢ per hour work-from-home deduction method extended
‘Much more complex’: ATO introduces new partnership profit guidelines

 

The Tax Office has released long-awaited partnership profit guidelines, three years after it first commenced a review of how professional firms engage in income splitting.

 

       

The ATO has released draft Practical Compliance Guideline 2021/D2, outlining how partners in law, accounting, engineering, architectural and medical firms should split profits.

The new guidelines, which are set to apply from 1 July this year, come three years after the ATO withdrew its “Assessing the Risk: Allocation of profits within professional firms guidelines” and “Everett Assignment” web material in late 2017.

According to the draft PCG, partners and firms must satisfy two gateways to prove that arrangements are commercially driven, and do not present any high-risk features, to be able to self-assess based on the ATO’s risk assessment methodology made up of three risk zones, namely low risk, moderate risk and high risk.

Failure to satisfy a gateway or falling outside the green risk zone will see the commissioner more likely to give closer scrutiny to the arrangement, including a deeper consideration of whether anti-avoidance provisions apply.

The Institute of Public Accountants general manager of technical policy Tony Greco believes the draft guidelines will present an opportunity for partners to self-assess the risk levels of their arrangements.

“On the one hand, it’s clear in that it’s identifying what [arrangements] are in weighting,” Mr Greco said. “People can sort of self-assess what level of interests their arrangement will attract from the ATO.”

But the density of the guidelines themselves make them a double-edged sword, Mr Greco said, as following them could prove a heavily involved process. 

“The previous [guidelines were] nowhere near as granular,” he said. “We just had to satisfy one of the guidelines in the previous allocation and document.

“Now you’ve got to go through gateway one and gateway two, and then self-assess risk. So, it’s a much more involved process.”

The new guidelines will not only require more work from taxpayers, but from the Tax Office, too, expects Mr Greco.

Part IVA of the guidelines offers clear risk assessment criteria, but will test whether people follow the guidelines, and leaves questions to be asked for those who find themselves in high-risk arrangements.

“It’s good from an administration point of view, and puts to the test whether people are applying these guidelines appropriately at the end of the day,” Mr Greco said.

“It poses some questions. If you self-assess and you’re high-risk, what are you going to do about it?”

The draft guidance comes after a group of organisations — including the joint professional accounting bodies — criticised the ATO’s ongoing consultation process on the guidelines which, Mr Greco said, left those it impacted in a “void”.

“You had a lot of consultation happening behind the scenes between that consultation group and the ATO,” Mr Greco said. 

“[But] I think what we’ve got to do now is sort of test them in the real world. And this is why it’s in draft format. 

“It obviously has input from practitioners, but at the end of the day, it’s the way they would like to identify risks and what falls within and outside of this compliance framework.”

The guidelines and the way they’re applied will be revisited for review in 2022.

View draft PCG 2021/D2 here. Consultation closes on 26 March.

 

 

 John Buckley 
03 March 2021 
accountantsdaily.com.au

 

site By AcctWeb