The Australian Taxation Office has dismissed suggestions that a recent draft document will lead to a wave of law firm incorporations and listings.
Speaking to Lawyers Weekly, ATO deputy chief tax counsel Des Maloney said the ATO has not changed its stance on law firm incorporation since 1989.
"The draft documentation repeats a position that was expressed in 1989," Maloney said. "It is not a change in approach, it is just the translation of the position that applied to partners in partnership.
"It is the same type of arrangement, but just in the context of an incorporated entity rather than a partnership."
Maloney said that what the ATO draft determination explains is that in a 'no goodwill' partnership, when partners move between firms, it won't give rise to a capital gains tax or additional cost.
"In one view, that would make incorporation easier, but there are many other things from a commercial point of view to think about."
Maloney nominated issues such as stamp duty, which is a state based tax, as being a major issue firms would need to consider if wanting to incorporate.
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