Does it feel better to know for certain that you are a tax audit target?

Law Firms and Accountancy Practices using Discretionary Trusts

In September 2014 the Tax Commissioner released a document headed "Assessing the risk: allocation of profits within professional firms."

In broad terms, the Commissioner is very unhappy that professional firms can use trusts and other structures so that less tax is paid than if the relevant profits were taxed directly in the hands of the individual lawyers or accountants who own the business.

The ATO position is that professionals who structure their firms as partnerships of discretionary trusts, for example, may be doing so for the dominant purpose of getting a tax benefit, so that the anti-avoidance rules in Part IVA of the Income Tax Assessment Act 1936 will apply.