From johnjeffreystax.com.au: Practical Compliance Guideline 2021/4 (PCG 2021/4) from the ATO outlines how profits in professional services firms should be allocated, particularly scrutinizing arrangements where individual professional practitioners receive disproportionately low profits.

The guideline establishes two gateways for compliance, emphasising the need for commercial rationale and absence of high-risk features to avoid anti-avoidance laws under Part IVA.

IPPs must conduct annual self-assessments of their profit allocation structures, maintaining documentation to substantiate their compliance with the guideline.