Big four consulting firm partners distributed $1.2 billion of their collective $2.7 billion profit via trusts and other income splitting measures to reduce their tax bill, the ATO says.
Big four consulting firm partners distributed $1.2 billion, or 44 per cent, of their collective $2.7 billion profit via trusts and other income splitting measures in the 2022 financial year to cut their tax bill, a Senate inquiry has been told.
Senators have criticised the use of income splitting techniques by big four partners, but others say that distributing income to reduce tax is a legal technique available to partners because they are part owners of the business.
The ATO said of the total $2.7 billion in taxable income to equity holders at the big four firms for the 2022 financial year, “$1 billion of taxable income distributed from their associated service trusts or similar entities” and another $200 million in income “was reported as distributed to family trusts”. A component of this $200 million was split using Everett assignments.
“Similarly, if there has been an Everett assignment of some of the partner’s interest in the partnership, that taxable income will be received and returned by associated individuals or entities,” the ATO said.
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