'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 engagement. 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 perspective.”

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

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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