Allocation of Professional Firm Profits

The ATO have issued new guidance (PCG 2021/4) setting out their assessment framework of the allocation of professional firm profits and the inclusion of this income in the hands of the individual professional practitioner (IPP).

There are two gateways that need to be reviewed in order to mitigate the risk assessment framework they have set out.  Broadly, reviewing the rate of tax the IPP’s are paying and also the portion of the overall share of professional income the IPP is receiving.

IPP’s need to review these guidelines annually.

We will of course soon be reaching out directly to those clients affected by these new guidelines and to assist in managing this process going forward.