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Extension of transitional period for work in process for professionals

Published on September 19, 2017

Extension of transitional period for work in process for professionals

 
In the March 22, 2017 budget, the Department of Finance proposed legislation to include unbilled work in process (WIP) for professionals in income over a 2 year period.  Depending on the size of a professional's WIP there could be a hefty tax burden without having the cash in hand from billings.  On September 8, 2017 Finance released draft legislation for comment that extends the transition period from 2 years to 5 years for tax years beginning on or after March 22, 2017.
 
Previously, professionals could defer unbilled WIP and include it in income only when complete and invoiced.  This change affects accountants, lawyers, veterinarians, chiropractors, doctors and dentists.
 
Exclusions from the new rules include contingency fees and WIP previously included in income.
 
Comments will be accepted on the draft legislation until October 10, 2017.
 
If you have questions about how these new rules will impact you and your business please contact our office.