A natural person practitioner transfers a practice to a company. Natural personal practitioners not in partnership transfer their respective practices to a company. Natural person practitioners in partnership transfer their respective interests in a practice to a number of companies which companies then conduct a practice in partnership. After one of the steps above, a company transfers a practice to another company. After the transfer of a practice, the company employs the natural person practitioner to assist it in the conduct of the practice.
Issues arise in relation to the disposition of the interest of the assignee.
For the purpose of the general provisions of the Act, the partnership will be the transferor. See Income Tax Ruling 2540 and Clauses 44-50 of Taxation Laws Amendment Bill 1991. See Income Tax Ruling 2328. A covenant in restraint of trade may be given by the natural person practitioner upon transfer of assets to the company. The Commission in Income Tax Ruling 2330 paragraph 36 and in Exposure Draft Ruling 14 identifies situations where income will be considered to flow directly or predominantly from the rendering of personal services.