Profit Allocation from Professional Firms
ATO’s PCG 2021/4: What It Means for Profit Allocation in Professional Firms If you operate a professional services firm—think accountants, lawyers, engineers, medical practitioners—there’s a document from the ATO that you need to be familiar with: Practical Compliance Guideline 2021/4 (PCG 2021/4). This guideline sets out how the ATO expects profits in these types […]
What makes the best tax advisors?
After more than four decades in the tax profession, I’ve come to a conclusion that might surprise some: technical knowledge, while essential, is not what truly sets a tax advisor apart. The real differentiator? A particular way of thinking. Let me explain. Many advisors pride themselves on having an encyclopaedic grasp of tax […]
When tax planning becomes tax avoidance.
What happened in Merchant v Commissioner of Taxation is something many of us in practice would recognise – a taxpayer with a large capital gain (sale of Plantic shares) crystallised a capital loss (BBG shares) to reduce their tax bill. Many of us would have given similar advice. The sale of BBG shares was […]
Succession planning and valuations – risks abound
The Australian Taxation Office (ATO) has recently increased its focus on succession planning, particularly concerning asset transfers between generations. Succession planning has been nominated on its website as a key area of focus. This is driven by the significant wealth transfer occurring as businesses established in the 1960s, 70s, and 80s are being passed on […]
Tax Reform Green Paper
My great-grandmother, who I called Grandma Mack, was a remarkable woman. Born around 1886, she passed away when I was just eight. One of her frequent tasks was meticulously cutting her front lawn with a pair of scissors. Now, it wasn’t a big lawn, but it took incredible determination and labour to achieve that perfectly […]
PSI and Part IVA Submissions
In my view, the most confusing part of the Australian income tax law for tax practitioners is the personal services income (PSI) rules. The release by the ATO of PCG 2024/D2 presented an opportunity to confront this perplexing area of the tax provisions. I fear that the opportunity is going to be lost and […]
40 years in the tax profession – Part 2
In October 1984 I transferred into the Melbourne Tax Division of Arthur Andersen & Co, which, at the time, was one of the ‘Big 8’ accounting firms in the world. Thus began my career in the Australian tax system. In this article (part 2 of a 2-part series), I will focus on what has […]
Getting a tax deduction for financial advice
Particularly as they see retirement on the horizon, people often seek financial advice to ensure their wealth is maximised. Also, financial advice may be sought for a number of other reasons during the course of one’s life. When the financial advisor gives you an invoice for their services, can you claim a tax deduction […]
40 years in the tax profession – Part 1
In October 1984 I transferred into the Melbourne Tax Division of Arthur Andersen & Co, which, at the time, was one of the ‘Big 8’ accounting firms in the world. Thus began my career in the Australian tax system. I thought some accountants would be interested in what has changed and what has not […]
Personal Services Income and Australia’s General Anti-Avoidance Rule
There is a complex set of tax rules that deal with what is known as ‘personal services income’ (PSI). PSI results from the efforts of human beings where the income is mainly a reward for the personal efforts and skills of an individual. Many occupations derive PSI. They include both so-called ‘professionals’ and trades […]