Allocation of profits within professional firms and Pt IVA

The ATO has released guidelines on how it will assess the risk of Pt IVA of ITAA 1936 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.

The guidelines apply to relevant arrangements within professional firms including, but not limited to, those providing services in the accounting, architectural, engineering, financial services, legal and medical professions.

The guidelines apply from 30 June 2015. However, the ATO has committed to reviewing them during the 2016-17 year, subject to the possibility of judicial guidance pending an appropriate test-case being identified.