Allocated profits within professional firms

There are potential tax implications associated with the allocation of profits within professional firms

The structure of professional firms give rise to different tax consequences.

Updated 19 November 2015

Historically, most professional firms were partnerships of natural persons. Professional firms are currently structured in a variety of ways, reflecting the economic and legal choices made by owners of those firms.

In some cases, these structures may be used in ways that give rise to different tax consequences and resulting tax compliance risks.

CPA Australia and the Australian Taxation Office (ATO) have released guidance that explores:

  • The changing commercial, structural and operational issues affecting professional firms in these industries and, more broadly, for their clients in other professions
  • ATO guidance on the potential tax implications associated with the allocation of profits within professional firms
  • How the ATO will assess the risk of Part IVA applying to the allocation of profits from a professional firm carried on through a partnership, trust or company, where the income of the firm is not personal services income.

A complimentary recorded presentation is available on the CPA Australia website and, in a November 2015 live chat on the topic, expert panelists addressed readers’ questions. The transcript can be viewed in the embedded window below or downloaded as a PDF.

The expert panelists were:

  • Simon Webster, Professional Firms Risk Manager, Australian Taxation Office
  • Adrian Zuccarini, Technical Leader Professional Firms, Australian Taxation Office
  • Michael Parker, Partner, Hall and Wilcox 

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