Take a few moments to learn how to best use multiple tax planning scenarios to create a quick and accurate client advice report for Individual Professional Practitioners (IPP). The PFP Tax Advice Report will automate your advice document and risk zone assessment for professional clients as per PCG 2021/4.
Steps to follow before generating the report:
Add the client & scenarios and select a recommended scenario
Start a new TaxPlan and add the required entities manually or add single entities directly from XPM.
Ensure the first entity added to all scenarios is always the relevant Individual Professional Practitioner (IPP).
Do not include multiple individuals in one TaxPlan as each individual needs a separate TaxPlan and advice report.
Create a base scenario reflecting current income and distributions
For the first entity IPP in the scenario, include:
Profit share received
Trust distribution received.
Dividends received (including franking credits).
Share of any income retained by the professional firm for the year.
Important: If a professional includes in their share of income retained earnings by a professional firm company and these are paid out to the professional in a future year, you will need to reduce the income allocation to the professional in the future year by the amount already assessed in their income in the prior year.
Salary/Employment Income from Firm.
Concessional Super Contributions.
Grossed Up Fringe Benefits.
Other Non-Firm Income for a Company or Individuals.
Firm-related deductions (except concessional super). Deductions are added as follows:
Select "Professional Firm Deductions" option from the Tax Deductions list.
Add any other additional Non-Firm related Deductions separately.
Produce the report to check the results and risk score for the base scenario
This report downloads as an MS Word document.
Review the scenarios and validate the risk zone calculations and scores.
Duplicate the base scenario and create a new recommended scenario if required
Add a second recommended scenario to ensure you include a "Green Zone" scenario for your client. This scenario should reflect at least a scenario where the final risk score is less than or equal to 7.
Be sure to add a Group Name and save your TaxPlan file.
Download the final tax advice report and prepare to send to your client
This report downloads as an MS Word document.
Manually add the client's casual or first name in the opening and closing paragraphs.
Review the scenarios and validate the risk zone calculations and scores.
Create a PDF of the final report and send it using your preferred delivery method. Save this in your client files.
Refer to the Professional Firm Profit Tax Advice - Service Delivery System and VPP email to learn more about how to engage clients and implement this service in your practice.