As practitioners will be aware, the ATO has suspended the application of its risk assessment guidelines for allocation of profits within professional services firms.
The ATO’s risk assessment guidelines previously stated they would be reviewed in 2017. However, writing in Thomson Reuters 2018 Weekly Tax Bulletin Issue 3, Lance Cunningham, BDO National Tax Director, says the suspension of the guidelines before the ATO conducted its review (which is yet to commence) has left many professional firms in a quandary, particularly those that were in the process of or contemplating a restructure in line with the suspended guidelines. Cunningham says it would have been preferable if the ATO had conducted the review before suspending the guidelines. If the ATO was concerned about specific high-risk factors, he said it could have kept the guidelines in place, specifically identified these high-risk factors and said the guidelines would not apply where any of these high-risk factors were present until its review was complete. He then goes on to discuss the suspended guidelines, when they do not apply, income generated from the business structure, benchmarks for individual professional partnerships, Everett assignments themselves, and the coming new Guidelines.
Read his excellent article in full in Issue 3 for 2018 of the Weekly Tax Bulletin.