'Swimming between the flags for professional service entities' – WA Professional Services Half Day

Corey Beat CTA

In December 2017, following a promised review, the Australian Taxation Office suspended the ‘Assessing
the risk: allocation of profits within professional firms’ guidelines and
Everett Assignment materials.

The review indicated that they were being misinterpreted
in relation to arrangements that go beyond the scope of the guidelines, with the
use of related party financing and self-managed super funds highlighted as being
of particular concern.

Following the suspension, the ATO encouraged those professional practitioners who were contemplating entering into new arrangements from 14
December 2017 to contact them via early
. It indicated that arrangements entered into prior to 14 December that exhibit any high risk factors may still be subject to review.

This, however,  is  just one area of the income tax
landscape for operating a professional services business that continues to perplex
and confound advisers.

We spoke with Corey Beat CTA, a Principal in the Tax
Services team at RSM Australia in Perth about his sessions at the upcoming Professional Services Half Day, which will take place in Perth on 1 March 2018.

Corey told us, “I’m presenting on Swimming between the flags for professional service entities, a
very topical session following the ATO’s actions in temporarily ‘pulling up’
the flags in December 2017.”

While the ATO has offered guidance on what it considers to be low risk strategies for allocating profits derived through professional
practice structures, historical anti-avoidance rulings remain in place. This means any attempt to “swim between the flags” could result in practitioners feeling
like they may be in too deep.

“Late last year the ATO withdrew the Guidelines for
Professional Practices, and announced consultation on an updated version of the
guidelines. The withdrawal announcement contained comments that the ATO were
looking into the use of superannuation funds and financing entities in professional
practice structures. My session will help delegates get an understanding of the
background to taxation of professional service practices, and a discussion on
the current state of play. This will not only be useful for delegates who have
professional service providers as clients, but may also be useful from a purely
self-interest perspective!”

Covering the legislative and administrative issues to
consider when dealing with income from professional service business, Corey
will also explore the Personal Services Income rules and relevant ATO rulings.

“I’ll be covering the income tax issues relevant to
professional services practices, including the history of the case law and
rulings on the use of trusts and companies in professional service practices, and the rise and fall of service trusts, before discussing the ATO’s current views
on risk areas with structuring professional services practices.”

“Following my session, David Murphy (Special Counsel, Jackson
McDonald) will look at 'Structuring for professional practices'.  His session will provide delegates with some
interesting viewpoints on effective structures from a regulatory and a taxation

The day will conclude with a workshop session covering case-study-style questions that will deal with issues raised in Corey and David’s

Corey’s area of practice is quite broad, and includes
work with listed and multinational companies and also locally-based private
groups. Affiliated with The Tax Institute for six years through the WA Professional
Development Committee, Corey chaired WA’s Professional Development Committee for
the last two years. He has served on the WA State Council and has been engaged
with organising the WA State Conventions and Tax Intensives, The Tax Institute
National Convention and the Noosa Tax Intensive.

Asked about his life outside tax, Corey told us “I have
two young daughters who keep me on my toes, between going for bush walks,
playing tennis, board games and video games with them. My eldest daughter is a massive Perth
Scorchers fan, so I love getting down to the WACA with her over the summer
months. And being a sucker for
punishment, I’ve recently returned to playing cricket after a nine-year
absence, most likely fuelled by watching too many BBL games with my daughter.”

The Professional Services Half Day took place on 1 March
2018 at City West Receptions, West Perth. The materials from the event are available on our website.


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