Interpretation of ATO guidelines on distributing profits within professional firms has been wide ranging and often creates high-risk situations. Recently, the Commissioner has changed his spots and is being tougher on the proportion of total practice income which ends up in the professional’s hands personally. This session examines the guidelines, recent changes in this area and the correct interpretation:

• The current ATO position – pre-and post 14th December 2017
• Everett assignments – are they still on?
• Allocation of profit arrangements that are of high risk
• When will income generated be personal services income
• Criteria for classifying a practice as high or low risk from an audit perspective:
  • satisfying the equivalent remuneration test
  • satisfying 50% remuneration test
  • satisfying 30% effective tax rate test
• What will heighten the risk of audit?
• Case studies – Audit checklist for high-risk behaviour