Professional Firm Profits (PFP) is a ChangeGPS module that helps accountants assess whether a professional firm's profit allocation arrangement falls within the ATO's acceptable risk zones under Practical Compliance Guideline PCG 2021/4. The module implements the ATO's two-Gateway and three Risk Assessment Factor (RAF) framework to determine whether an Individual Professional Practitioner's (IPP) profit allocation arrangement is in the GREEN (low risk), AMBER (medium risk), or RED (high risk) zone.
PFP is available in Australia.
What Professional Firm Profits does
The PFP module conducts a structured assessment of a professional firm's profit allocation arrangement using the ATO's PCG 2021/4 framework, covering two Gateway tests and up to three Risk Assessment Factors.
The module scores the arrangement across the three RAFs — Proportion of Profit Entitlement, Total Effective Tax Rate, and Appropriate Remuneration — and calculates an overall risk zone based on the total score.
PFP supports multiple scenarios per assessment, allowing you to model and compare different profit allocation approaches before advising your client.
The module generates a professional advice report documenting the assessment, scores, risk zone, and recommendations.
Who should use Professional Firm Profits
PFP is designed for accountants and tax advisors who act for professional practitioners — including accountants, lawyers, doctors, engineers, architects, and financial advisers — who operate through a practice entity (company, trust, or partnership) rather than practising directly as individuals.
The PCG 2021/4 framework applies where an IPP's share of the firm's profits is allocated through an associated entity rather than being received entirely as personal income. The module is particularly valuable as an annual compliance tool to confirm that the firm's profit allocation arrangements remain within the GREEN or AMBER zone.
Key features
Eight-step structured wizard — Two Gateway assessments followed by three Risk Assessment Factors and a final results summary.
Gateway 1 — Commercial Rationale (PCG 2021/4 Para 39–46) — Assesses whether the arrangement is on a commercial basis with genuine non-tax reasons and reflects the IPP's actual contribution to the firm.
Gateway 2 — High-Risk Features (PCG 2021/4 Para 47–60) — Screens for five specific high-risk features that indicate arrangements the ATO views as most concerning.
RAF 1 — Proportion of Profit Entitlement (PCG 2021/4 Para 82–83) — Measures the proportion of firm profits received by the IPP directly versus through associated entities.
RAF 2 — Total Effective Tax Rate (PCG 2021/4 Para 84–99) — Assesses the overall effective tax rate across the IPP and all associated entities receiving profit allocations.
RAF 3 — Appropriate Remuneration (PCG 2021/4 Para 101–105) — Optional third factor assessing whether the IPP is being appropriately remunerated for their labour contribution.
100% rule — Where the IPP receives 100% of the firm's profits directly (no associated entities involved), RAF 2 and RAF 3 are automatically skipped and the result is GREEN.
Multiple scenarios — Model different profit allocation approaches and compare risk zones and scores across scenarios.
Automatic scoring — RAF scores are calculated automatically as you enter financial data, with the overall risk zone updated in real time.
GREEN, AMBER, RED risk zones — Based on the total RAF score as defined in PCG 2021/4.
How Professional Firm Profits fits into ChangeGPS
Tax Plan — PFP assessment results can inform the profit allocation strategy modelled in Tax Plan for IPP clients. The recommended scenario from PFP can guide the distribution amounts entered in the Tax Plan for the firm and associated entities.
Client Import Manager (CIM) — Client details can be imported from CIM to pre-fill the firm and practitioner information in Step 1.
Getting started
Navigate to the Professional Firm Profits module from the ChangeGPS dashboard and select New Assessment.
In Step 1 — Client Selection, enter the firm name, practitioner details, and select the assessment year.
In Step 2 — Gateway 1, answer the three commercial rationale questions about the profit allocation arrangement.
In Step 3 — Gateway 2, work through the five high-risk feature questions.
In Steps 4, 5, and 6, enter the financial data for RAF 1, RAF 2, and RAF 3 respectively.
In Step 7 — Results, review the total score and risk zone classification.
In Step 8 — Review & Send, preview and export the completed advice report.
Need help?
If you have questions about Professional Firm Profits or need assistance with a specific profit allocation arrangement, reach out to our support team through the chat widget or contact your account manager.