Draft Practical Compliance Guideline PCG 2024/D2 – Personal services businesses and Part IVA of the Income Tax Assessment Act 1936
The Tax Institute (TTI) welcomes the opportunity to make a submission to the Australian Taxation Office (ATO) in relation to Draft Practical Compliance Guideline PCG 2024/D2 (draft PCG). The draft PCG addresses an important area of tax law and one which the draft PCG at paragraph 5 implicitly acknowledges is not universally well understood. It is within the context of the need for greater certainty for taxpayers in this area of tax law that we make this submission.
In the development of this submission, we have consulted with our National Small and Medium Entities Technical Committee to prepare a considered response that represents the views of our broader membership.
In our submission we have been guided by:
- the general role played by ATO Practical Compliance Guidelines (PCGs). We note that PCGs “[…] represent material on how the ATO will allocate its compliance resources according to assessments of risk and may outline administrative approaches that mitigate practical difficulties relating to the operation of tax laws.” (PCG 2016/1 - PCGs: role in ATO’s public advice and guidance, paragraph 23); and
- the need for greater certainty, particularly for small business taxpayers.
In this regard, we include several specific comments in relation to the guidance in the draft PCG and, in particular, our comments on how we feel a number of the low and higher risk examples could provide even further helpful guidance to taxpayers by elaborating on particular fact patterns. Our comments are set out in Appendix A.
The Tax Institute is the leading forum for the tax community in Australia. We are committed to shaping the future of the tax profession and the continuous improvement of the tax system for the benefit of all. In this regard, The Tax Institute seeks to influence tax and revenue policy at the highest level with a view to achieving a better Australian tax system for all.