Allocation of professional firm profits – draft ATO guidance now available after four-year delay
Well, it's only taken the ATO four years to replace its original guidance on the allocation of professional firm profits, which was withdrawn in December 2017.
At first blush, you may think that the ATO has a weird sense of humour, issuing the new guidance, in the form of PCG 2021/4, the week before Christmas; and especially after we've all had another tough year.
However, there is a cheery message in its issue now: the start date is 1 July 2022 (see paragraph 17 of the PCG), there is a transitional period to 30 June 2024 (see paragraph 114 of the PCG), and there is what we would call a safe harbour, in that, if current arrangements fit within the old guidelines, they’re 'safe', or as safe as swimming between the flags can ever be.
So, you don't need to worry about the new guidance in PCG 2012/4 applying to the 2021 financial year (which was always absurd) or the 2022 financial year.
We will send out a more detailed analysis of PCG 2021/4 and our recommendations for navigating 'practical compliance' in January.
In the meantime, we wish and hope you can have a Happy Christmas and a good break, and take a breather. We certainly hope to do so.
Best wishes from the Hall & Wilcox Tax team!
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